If a company installs an automated factory which increases their fixed costs and lowers their variable costs, you might say they have decreased their operating leverage

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Quizplus · Accepted Answer

Installing an automated factory that increases fixed costs and lowers variable costs can actually increase a company's operating leverage. Operating leverage refers to the extent to which a company's costs are fixed (i.e. not affected by changes in sales volume) versus variable (i.e. affected by changes in sales volume). By increasing fixed costs and lowering variable costs, a company is increasing its reliance on a high volume of sales to generate profitability, which is characteristic of higher operating leverage.

If a Company Installs an Automated Factory Which Increases Their