Question: Operating Leverage is the process of adding fixed costs to reduce variable costs. An example is a company that manufactures its own product would have
Operating Leverage is the process of adding fixed costs to reduce variable costs. An example is a company that manufactures its own product would have higher fixed costs and a higher break even but should have also have a higher contribution margin per unit. A company that outsources manufacturing would have lower fixed costs and a lower break even but also a lower contribution margin. Find an example of a recent news story where a company has a made a decision that will increase or decrease operating leverage. Explain how their decision increased or decreased operating leverage
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