A firm with high operating leverage has:
A) low amounts of fixed cost in their production process.
B) high amounts of variable cost in their production process.
C) high amounts of fixed cost in their production process.
D) high price per unit.
E) low price per unit.

Question

Quizplus · Accepted Answer

High operating leverage is characterized by high amounts of fixed costs in the production process, which means that as sales increase, profits increase at a faster rate due to the spread of fixed costs over a larger number of units.

A Firm with High Operating Leverage Has