Which of the following statements about operating leverage is NOT true? Group of answer choices Operating leverage predicts the effect of fixed costs on operating income when sales volume changes. A higher proportion of fixed cost in a cost structure results in higher operating leverage. The higher the operating leverage, the higher the risk of loss when sales volume decreases. A higher proportion of fixed cost in a cost structure results in lower operating leverage.
Which of the following statements about operating leverage is NOT true? Group of answer choices Operating leverage predicts the effect of fixed costs on operating income when sales volume changes. A higher proportion of fixed cost in a cost structure results in higher operating leverage. The higher the operating leverage, the higher the risk of loss when sales volume decreases. A higher proportion of fixed cost in a cost structure results in lower operating leverage.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Which of the following statements about operating leverage is NOT true?
Group of answer choices
Operating leverage predicts the effect of fixed costs on operating income when sales volume changes.
A higher proportion of fixed cost in a cost structure results in higher operating leverage.
The higher the operating leverage, the higher the risk of loss when sales volume decreases.
A higher proportion of fixed cost in a cost structure results in lower operating leverage.
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