The base level of sales must be held constant to compare the total leverage associated with different levels of fixed costs.

Name: The base level of sales must be held constant to compare the total leverage associated with different levels of fixed costs.
Brand: Quizplus
Rating: 4.7 (36 reviews)

Question

Quizplus · Accepted Answer

This statement is true. In order to compare total leverage associated with different levels of fixed costs, we need to hold the base level of sales constant. This allows us to isolate the effects of changes in fixed costs on total leverage.

The Base Level of Sales Must Be Held Constant to Compare