Operating leverage is the use of fixed cost to extract higher percentage changes in profits as sales activity changes.

Name: Operating leverage is the use of fixed cost to extract higher percentage changes in profits as sales activity changes.
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Question

Quizplus · Accepted Answer

This is a correct definition of operating leverage. When fixed costs are high and variable costs are low, a small increase in sales can lead to a large increase in profits due to the leverage effect.

Operating Leverage Is the Use of Fixed Cost to Extract