Operating leverage predicts the effects fixed costs have on changes in operating income when ________.
A) production is discontinued
B) there are no sales returns
C) variable costs change
D) sales volume changes

Question

Quizplus · Accepted Answer

Operating leverage measures how sensitive operating income is to changes in sales volume. Specifically, it predicts the effects fixed costs have on changes in operating income when sales volume changes. Therefore, the correct choice is D - when sales volume changes.

Operating Leverage Predicts the Effects Fixed Costs Have on Changes