Solved: Change in proportion to the revenue change, Accounting Basics

Change in proportion to the revenue change

Problem: A 10% change in a firm's revenues is likely to result in a change of more than 10% in the firm's operating income because:

1) not all of the firm's costs will change in proportion to the revenue change.

2) the firm has financial leverage.

3) the contribution margin ratio will change in proportion to the revenue change.

4) only fixed expenses will change in proportion to the revenue change.

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Accounting Basics: Change in proportion to the revenue change

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Solution Preview :

Prepared by a verified Expert

Accounting Basics: Change in proportion to the revenue change

Reference No:- TGS01619634

Have a Question? (oR Write a Review)

Recent Questions Asked Accounting Basics

Q : Difference between tax refund and a tax benefit

Q : Depreciation-depletion and amortization expense

Q : Acceptable transfer price from the perspective of division

Q : Products producing from a single raw material input

Q : Change in proportion to the revenue change

Q : Another term for mixed costs

Q : Computing the cash payback period

Q : Conflicts of interest in the accounting profession

Q : Cost of the competing patent

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Solution Preview :

Prepared by a verified Expert

Accounting Basics: Change in proportion to the revenue change

Reference No:- TGS01619634

Recent Questions Asked Accounting Basics

Q : Difference between tax refund and a tax benefit

Q : Depreciation-depletion and amortization expense

Q : Acceptable transfer price from the perspective of division

Q : Products producing from a single raw material input

Q : Change in proportion to the revenue change

Q : Another term for mixed costs

Q : Computing the cash payback period

Q : Conflicts of interest in the accounting profession

Q : Cost of the competing patent

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