When management selects new production technologies that require a higher proportion of fixed costs than that of its operations, then the implementation of those technologies will:
A) decrease the DOL.
B) increase the DOL.
C) decrease the NPV-breakeven level of sales.
D)reduce the NPV of the cash flows.

Question

Quizplus · Accepted Answer

The higher proportion of fixed costs in the new production technologies will increase the operating leverage, leading to an increase in the degree of operating leverage (DOL).

When Management Selects New Production Technologies That Require a Higher