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
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.
Step by Step Solution
3.40 Rating (159 Votes )
There are 3 Steps involved in it
One recent example of a company making a decision that will increase operating leverage is Teslas pl... View full answer
Get step-by-step solutions from verified subject matter experts
