A firm with high operating leverage has:
A) low fixed costs in its production process.
B) high variable costs in its production process.
C) high fixed costs in its production process.
D) high price per unit.
E) low price per unit.

Question

Quizplus · Accepted Answer

High operating leverage means that a firm has a high proportion of fixed costs in its production process. This means that a small change in sales revenue will result in a larger change in operating income.

A Firm with High Operating Leverage Has