Solved

Company X Has a Degree of Operating Leverage of 10

Question 81

Multiple Choice

Company X has a degree of operating leverage of 10, whereas, Company Y has a degree of operating leverage of 5. Each company has the same level of sales.
Which of the following statements is true?


A) If sales increase by 10%, Company Y would have a higher increase in before-tax profit
B) Company X has a higher relative amount of fixed costs in its cost structure than does Company Y.
C) If sales decrease by 10%, Company X would have a lower decrease in before-tax profit.
D) Company Y has a higher relative amount of fixed costs in its cost structure than does Company X.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents