Which one of the following industries has the highest level of operating leverage?
A) Steel
B) Paper
C) Hotels
D)Machinery

Question

Quizplus · Accepted Answer

The industry with the highest fixed costs and the highest contribution margin ratio will have the highest degree of operating leverage. The steel industry has high fixed costs as it requires massive capital investments in facilities and equipment. Additionally, steel companies have a high degree of variable costs, such as raw materials and labor, which allows for significant changes in revenue with small changes in output. Therefore, the steel industry has a higher level of operating leverage compared to paper, hotels, and machinery.

Which One of the Following Industries Has the Highest Level