{"id":56300,"date":"2024-04-16T00:42:17","date_gmt":"2024-04-16T00:42:17","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=56300"},"modified":"2024-04-16T00:42:17","modified_gmt":"2024-04-16T00:42:17","slug":"operating-leverage-______","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/operating-leverage-______\/","title":{"rendered":"Operating leverage = ______."},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a9732774f298\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"true\">\r\n                    contribution \/ EBIT                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    contribution \/ EBT                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    contribution \/ total expenses                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"false\">\r\n                    contribution \/ operating PBT                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is: A. contribution \/ EBIT.<\/p>\n<p>Operating leverage is a measure of how a company&#8217;s operating costs change in response to changes in sales. It is calculated by dividing contribution margin by earnings before interest and taxes (EBIT).<\/p>\n<p>Contribution margin is the amount of revenue that remains after deducting variable costs. EBIT is earnings before interest and taxes, which is calculated by deducting operating expenses from revenue.<\/p>\n<p>A high operating leverage indicates that a company has a high proportion of fixed costs. This means that a small change in sales can lead to a large change in EBIT. A low operating leverage indicates that a company has a low proportion of fixed costs. This means that a large change in sales can lead to a small change in EBIT.<\/p>\n<p>Operating leverage can be a positive or negative factor for a company. A high operating leverage can be beneficial if sales are increasing, as it can lead to higher profits. However, a high operating leverage can be harmful if sales are decreasing, as it can lead to larger losses.<\/p>\n<p>Here is a brief explanation of each option:<\/p>\n<ul>\n<li>Option A: Contribution \/ EBIT. This is the correct answer. Contribution margin is the amount of revenue that remains after deducting variable costs. EBIT is earnings before interest and taxes, which is calculated by deducting operating expenses from revenue. Operating leverage is a measure of how a company&#8217;s operating costs change in response to changes in sales. It is calculated by dividing contribution margin by EBIT.<\/li>\n<li>Option B: Contribution \/ EBT. EBT is earnings before taxes. This is not the correct answer because it does not take into account interest expenses.<\/li>\n<li>Option C: Contribution \/ total expenses. Total expenses is the sum of all of a company&#8217;s expenses, including variable and fixed costs. This is not the correct answer <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> because it does not take into <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> account contribution margin.<\/li>\n<li>Option D: Contribution \/ operating PBT. Operating PBT is operating profit before tax. This is not the correct answer because it does not take into account interest expenses.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Subscribe on YouTube<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Operating leverage = ______.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/operating-leverage-______\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Operating leverage = ______.\" \/>\n<meta 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