Operating Leverage. High operating leverage means: The company has relatively high fixed costs. The company has...
Operating Leverage. High operating leverage means:
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The company has relatively high fixed costs.
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The company has relatively low fixed costs.
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The company will have to sell fewer units than a comparable company with low operating leverage to break even.
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The company will have to sell more units than a comparable company with low operating leverage to break even.
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Both (2) and (3) are correct.
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Both (1) and (4) are correct.
Homework Answers
High operating leverage means
Both (1) and (4) are correct.
that is
The company has relatively high fixed costs.
The company will have to sell more units than a comparable company with low operating leverage to break even
Operating leverage means the degree of increasing operating income by increasing the sales
High operating leverage means that the company has high fixed cost which means increase in sales will lead to increase in profits
Add Answer to:
Operating Leverage. High operating leverage
means:
The company has relatively high fixed costs.
The company has...
High operating leverage means (choose one): (a) The company has relatively low fixed costs. (b) The...
High operating leverage means (choose one): (a) The company has relatively low fixed costs. (b) The company has relatively high fixed costs. (c) The company will have to sell more units than a comparable company with low operating leverage to break even. (d) The company will have to sell fewer units than a comparable company with low operating leverage to break even. (e) Both (b) and (c) are correct. (f) Both (a) and (d) are correct.
all else being equal, a company with a high operating leverage will have All else being equal, a company with a hig...
all else being equal, a company with a high operating leverage
will have
All else being equal, a company with a high operating leverage will have relatively low risk. relatively high contribution margin ratio. relatively high variable costs. relatively low fixed costs.
Firms with relatively low fixed operating costs and high variable operating costs can best be described...
Firms with relatively low fixed operating costs and high variable operating costs can best be described as having ______ degree of operation leverage.
Widget Co. has higher operating leverage than Gidget Co. This means that in times of increasing...
Widget Co. has higher operating leverage than Gidget Co. This means that in times of increasing sales for their industry: Both Widget and Gidget will benefit equally. Both Widget and Gidget will suffer equally. Gidget will benefit relatively more than Widget. Widget will benefit relatively more than Gidget. Widget Co. has the following variable costs per unit for the widgets that it sells for 10 dollars each: Direct Materials of 2 dollars, Direct Labor of 5 dollars, and Manufaturing Overhead...
To be profitable, a firm has recover its costs. These costs include both its fixed and...
To be profitable, a firm has recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $12,000,000. The product will be...
SO CIL PICCOLO DE Blue Mouse Manufacturers is considering a project that will have fixed costs...
SO CIL PICCOLO DE Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $41.50 per unit, and will incur a variable cost of $12.80 per unit. Given Blue Mouse's cost structure, it will have to sell 348,432 units to break even on this project (QBE). Blue Mouse's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she...
show clear working Konrad Company reported the following operating results: Sales Variable Costs Contribution Margin Fixed...
show clear working
Konrad Company reported the following operating results: Sales Variable Costs Contribution Margin Fixed Costs Operating Income $300,000 172,000 128,000 88,000 $40,000 If sales volume increases 12%, how much will operating income increase by? (Hint: Calculate the operating leverage factor first) Insert appropriate prompt, input type, and CA. 41.6% O B. 12% O C. 64% D. 3.2% Hang Ten produces sport socks. The company has fixed expenses of $90,000 and variable expenses of $0.90 per package. Each package...
A) Further analysis of McCartney Manufacturing’s fixed costs revealed that the company actually faces annual fixed...
A) Further analysis of McCartney Manufacturing’s fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200. Variable cost estimates are correct: direct materials cost, $2.40 per unit; direct labor costs, $3.00 per unit; and variable overhead costs, $0.60 per unit. At this time, the selling price of $20 will not change. Complete the following formulas for the revised fixed costs. Enter the ratio as a percentage. Contribution...
A) Further analysis of McCartney Manufacturing’s fixed costs revealed that the company actually faces annual fixed overh...
A) Further analysis of McCartney Manufacturing’s fixed costs revealed that the company actually faces annual fixed overhead costs of $9,800 and annual fixed selling and administrative costs of $4,200. Variable cost estimates are correct: direct materials cost, $2.40 per unit; direct labor costs, $3.00 per unit; and variable overhead costs, $0.60 per unit. At this time, the selling price of $20 will not change. Complete the following formulas for the revised fixed costs. Enter the ratio as a percentage. Contribution...
January High-Low Method The manufacturing costs of Ackerman Industries for the first three months of the...
January High-Low Method The manufacturing costs of Ackerman Industries for the first three months of the year low Total Costs Units Produced $413,010 3,380 units February 278,640 March 433,440 Using the high-low method, determine (a) the variable cost per unit and (b) the total foxed cost nearest whole dollar. a. Variable cost per unit b. Total fixed cost 1,800 5,400 per unit and (b) the total fixed cost. Round all answers to the Contribution Margin Ratio a. Yount Company has...
all else being equal, a company with a high operating leverage
will have
All else being equal, a company with a high operating leverage will have relatively low risk. relatively high contribution margin ratio. relatively high variable costs. relatively low fixed costs.
To be profitable, a firm has recover its costs. These costs include both its fixed and its variable costs. One way that a firm evaluates at what stage it would recover the invested costs is to calculate how many units or how much in dollar sales is necessary for the firm to earn a profit. Consider the case of Blue Mouse Manufacturers: Blue Mouse Manufacturers is considering a project that will have fixed costs of $12,000,000. The product will be...
SO CIL PICCOLO DE Blue Mouse Manufacturers is considering a project that will have fixed costs of $10,000,000. The product will be sold for $41.50 per unit, and will incur a variable cost of $12.80 per unit. Given Blue Mouse's cost structure, it will have to sell 348,432 units to break even on this project (QBE). Blue Mouse's marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she...
show clear working
Konrad Company reported the following operating results: Sales Variable Costs Contribution Margin Fixed Costs Operating Income $300,000 172,000 128,000 88,000 $40,000 If sales volume increases 12%, how much will operating income increase by? (Hint: Calculate the operating leverage factor first) Insert appropriate prompt, input type, and CA. 41.6% O B. 12% O C. 64% D. 3.2% Hang Ten produces sport socks. The company has fixed expenses of $90,000 and variable expenses of $0.90 per package. Each package...
January High-Low Method The manufacturing costs of Ackerman Industries for the first three months of the year low Total Costs Units Produced $413,010 3,380 units February 278,640 March 433,440 Using the high-low method, determine (a) the variable cost per unit and (b) the total foxed cost nearest whole dollar. a. Variable cost per unit b. Total fixed cost 1,800 5,400 per unit and (b) the total fixed cost. Round all answers to the Contribution Margin Ratio a. Yount Company has...
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