Q279
An effect of fixed cost to change in operating income is classified as
A.
uncertain margin
B.
certain margin
C.
operating margin
D.
operating leverage
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
An effect of fixed cost to change in operating income is classified as operating leverage. Operating leverage is a cost-accounting formula that measures the degree to which a firm or project can increase operating income by increasing revenue. A business that generates sales with a high gross margin and low variable costs has high operating leverage.