Alternative methods for producing a given product often have different degrees of operating leverage and hence have different breakeven points and degrees of risk.

Question

Quizplus · Accepted Answer

This statement is true. Operating leverage refers to the degree to which a company's fixed costs are used to produce a given level of output. Different methods of production can have different levels of fixed costs, which in turn affect the breakeven point (the output level at which total revenue equals total costs) and the degree of risk associated with the production method.

Alternative Methods for Producing a Given Product Often Have Different