Which one of the following could lower the risk of a project by lowering the degree of operating leverage?
A) You could hire temporary workers from an employment agency rather than hiring part-time employees.
B) You could use sub-contractors to produce sub-assemblies of your product rather than purchasing new equipment to do the work in-house.
C) You could lease equipment on a long-term basis rather than buying the equipment.
D) You could lower the projected selling price per unit.
E) You could change the production method to one which relies more on ﬁxed costs and less on variable costs than the current proposed method of production.

Question

Quizplus · Accepted Answer

Using sub-contractors instead of purchasing new equipment reduces fixed costs, thereby lowering the degree of operating leverage and risk.

Which One of the Following Could Lower the Risk of a Project