Which of the following statements about operating leverage is NOT true? Group of answer choices Operating leverage predicts the effect of fixed costs on operating income when sales volume changes. A higher proportion of fixed cost in a cost structure results in higher operating leverage. The higher the operating leverage, the higher the risk of loss when sales volume decreases. A higher proportion of fixed cost in a cost structure results in lower operating leverage.
Which of the following statements about operating leverage is NOT true? Group of answer choices Operating leverage predicts the effect of fixed costs on operating income when sales volume changes. A higher proportion of fixed cost in a cost structure results in higher operating leverage. The higher the operating leverage, the higher the risk of loss when sales volume decreases. A higher proportion of fixed cost in a cost structure results in lower operating leverage.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 11MC: When should a segment be dropped? A. only when the decrease in total contribution margin is less...
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Question
Which of the following statements about operating leverage is NOT true?
Group of answer choices
Operating leverage predicts the effect of fixed costs on operating income when sales volume changes.
A higher proportion of fixed cost in a cost structure results in higher operating leverage.
The higher the operating leverage, the higher the risk of loss when sales volume decreases.
A higher proportion of fixed cost in a cost structure results in lower operating leverage.
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