With the existence of fixed operating costs, an increase in sales will result in___________increase inEBIT.
A) a proportional
B) a more than proportional
C) a less than proportional
D) an equal

Question

Quizplus · Accepted Answer

With fixed operating costs, an increase in sales leads to a more than proportional increase in EBIT because the fixed costs are spread over a larger sales volume, reducing the per-unit cost and increasing profitability.

With the Existence of Fixed Operating Costs, an Increase in Sales