The higher the operating leverage factor,the:

Question

Quizplus · Accepted Answer

The higher the operating leverage factor, the more fixed costs a company has in its cost structure. This means that changes in volume (sales) will have a greater impact on operating income. As sales increase, the contribution margin per unit will increase, and the company will generate more operating income due to the higher operating leverage. On the other hand, a decrease in sales will have a greater negative impact on operating income due to the higher fixed costs. Therefore, option A is correct.

The Higher the Operating Leverage Factor,the