Which of the following statements is TRUE concerning operating leverage?
A) It summarizes the risk-return tradeoff across alternate revenue possibilities.
B) It measures the change in operating income when costs change proportionately with the change in the number of units sold.
C) The degree of operating leverage increases inversely to the number of units sold.
D) The degree of operating leverage remains constant (in the relevant range) when there is a change in the number of units sold.
E) The degree of operating leverage equals contribution margin divided by operating income, at any specific sales level.
Correct Answer:
Verified
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