Which of the following is a key determinant of operating leverage?
A) Level of debt.
B) Physical location of production facilities.
C) Cost of debt.
D) Technology.
E) Capital structure.

Question

Quizplus · Accepted Answer

Technology is a key determinant of operating leverage because it affects the fixed and variable costs of production. A firm with high fixed costs and low variable costs is said to have high operating leverage, while a firm with low fixed costs and high variable costs is said to have low operating leverage. Technology influences the mix of fixed and variable costs in a firm's production process.

Which of the Following Is a Key Determinant of Operating