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.
Homework Answers
High operating leverage means :
The company has high fixed cost.
If there is high fixed cost then there will be high breakeven point
This means that the firm has to sell more units than compared to company with low operating leverage to achieve breakeven .
Thus answer : E . both (b) and (c)
Add Answer to:
High operating leverage means (choose one):
(a) The company has relatively low
fixed costs.
(b) The...
Operating Leverage. High operating leverage means: The company has relatively high fixed costs. The company has...
Operating Leverage. High operating leverage means: The company has relatively high fixed costs. The company has relatively low fixed costs. The company will have to sell fewer units than a comparable company with low operating leverage to break even. The company will have to sell more units than a comparable company with low operating leverage to break even. Both (2) and (3) are correct. Both (1) and (4) are correct.
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.
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.
Higher operating leverage: Select one: a. means higher proportion of fixed costs within a firm’s overall...
Higher operating leverage: Select one: a. means higher proportion of fixed costs within a firm’s overall cost structure b. leads to more business risk c. leads to higher expected EBIT d. leads to higher risk e. All of the above
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...
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...
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...
Blank space answer: 1) 122,137 / 337,913 / 522,648 / 308,434 2) low / high To...
Blank space answer:
1) 122,137 / 337,913 / 522,648 / 308,434
2) low / high
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 Petrox Oil Co.: Petrox Oil Co....
Degree of operating leverage Grey Products has fixed operating costs of $389,000, variable operating costs of...
Degree of operating leverage Grey Products has fixed operating costs of $389,000, variable operating costs of $16.19 per unit, and a selling price of $63.43 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 10,000, 12,000, and 14,000 units, respectively. c. With 12,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of...
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of $16.55 per unit, and a selling price of $63.45 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 11,000, 13,000, and 15,000 units, respectively. c. With 13,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
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.
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...
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...
Blank space answer:
1) 122,137 / 337,913 / 522,648 / 308,434
2) low / high
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 Petrox Oil Co.: Petrox Oil Co....
Degree of operating leverage Grey Products has fixed operating costs of $389,000, variable operating costs of $16.19 per unit, and a selling price of $63.43 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 10,000, 12,000, and 14,000 units, respectively. c. With 12,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of $16.55 per unit, and a selling price of $63.45 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 11,000, 13,000, and 15,000 units, respectively. c. With 13,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
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