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121 a low magnitude of operating leverage is best for most companies 122 the darien 4301577


121. A low magnitude of operating leverage is best for most companies. 

122. The Darien Company is considering the introduction of a new line of high end electronics. Because there is considerable uncertainty with regard to the demand for the products, the company would probably be served better by a fixed cost structure. 

123. Descriptions of cost behavior as fixed or variable pertain to a particular range of activity. 

124. Outside of the relevant range, variable costs will become fixed. 

125. Within the relevant range, the fixed cost per unit can be expected to increase with increases in volume. 

126. The activity base selected determines whether a cost behaves as a variable cost or fixed cost. 

127. A cost that is considered variable for one activity base may be considered fixed for a different activity base. 

128. One reason for computing the average cost for a product rather than the actual cost is that average cost is easier to compute. 

129. One way that computing an average cost per unit facilitates management decision making is that managers are provided more timely and more relevant cost information. 

130. Potential problems associated with cost averaging can be reduced by averaging the cost over a longer span of time. 



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