A decrease in operating leverage may be achieved by increasing fixed costs relative to variable costs.

Name: A decrease in operating leverage may be achieved by increasing fixed costs relative to variable costs.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A decrease in operating leverage is achieved by decreasing fixed costs relative to variable costs, not increasing them. Operating leverage measures how sensitive a company's operating income is to a change in revenues, which is higher when fixed costs are a larger proportion of total costs.

A Decrease in Operating Leverage May Be Achieved by Increasing