111 companies with high operating leverage will experience lower profits when sales 4301600
111. Companies with high operating leverage will experience lower profits when sales increase than will companies with lower operating leverage.
112. A company with a completely variable cost structure will have operating leverage of 1.
113. Gross margin represents the amount available to cover fixed expenses and then provide company profits.
114. No contribution margin is provided by selling one unit of a product at a price of $25 if variable production costs are $20, variable general and administrative costs are $5, and fixed costs are $3 per unit.
115. The contribution format income statement is not widely used for external financial reporting, but is allowed by GAAP.
116. The contribution format income statement classifies costs according to their behavior patterns.
117. Contribution margin can only be determined if costs are separated into product and period costs.
118. If a company has both fixed and variable costs, their operating leverage will always be greater than 1.
119. The higher the magnitude of a company's operating leverage, the less benefit the company will receive from a given percentage increase in revenue.
120. The higher the magnitude of a company's operating leverage, the greater the decrease in profit for a given percentage decreases in revenue.