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 can help reduce the risk associated with a project because it decreases the project's sensitivity to changes in sales volume, thereby making earnings more stable and less risky.

You Are Considering a Project That You Believe Is Quite