You are considering a project that you believe is quite risky. To reduce any potentially harmful results from accepting this project, you could:
A) Lower the degree of operating leverage.
B) Lower the contribution margin.
C) Increase the initial cash outlay.
D) Increase the ﬁxed costs per unit while lowering the contribution margin.
E) Lower the operating cash ﬂow of the project.

Question

Quizplus · Accepted Answer

Lowering the degree of operating leverage means reducing the proportion of fixed costs in the project. This would make the project less risky as variable costs can be decreased or increased based on the demand or market changes.

You Are Considering a Project That You Believe Is Quite