High degree of operating leverage signals the existence of a high portion of variable costs True O False
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- The concept of operating leverage involves the use of __________ to magnify returns at high levels of operation. Multiple Choice fixed costs variable costs marginal costs semi-variable costsIncreasing variable cost while decreasing fixed costThe simplifying assumption that costs and volume vary in straight-line relationships makes the analysis of cost behav-ior much easier. What factors make this a reasonable and useful assumption in many cases?
- Cost-volume-profit analysis favors either variable costing or absorption costs. Why?Why is a scattergraph a good first step in separating mixed costs into their fixed and variable components?What is the scattergraph method, and why is it used? Why is a scattergraph a good first step in separating mixed costs into their fixed and variable components?
- When output volume increases, do variable costs per unit increase, decrease, or stay the same within the relevant range of activity? Explain.Absorption costing is more compatible with cost-volume-profit analysis than is variablecosting.TRUEFALSEThe increase/decrease in variable cost from existing level to the new level is called as __cost. a.Standard b.Marginal c.Fixed d.Opportunity
