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Soloha48 [4]
3 years ago
15

Suppose a company with high operating leverage is also operating at near capacity for all its fixed-cost resources. How could an

increase in sales volume result in decreasing economies of scale for this company?
Business
1 answer:
TiliK225 [7]3 years ago
8 0

Answer Explanation:

Operating leverage is the degree to which a firm is able to increase its income by increasing its revenue which is based on its fixed cost.

Economies of scales is the increase in output with the decrease in per unit cost.

In the question it states that a company has high operating leverage and operating at near capacity which means the company is using more fixed assets in comparison to its current assets. If the company uses more fixed assets which is by increasing sales volume then the economies of scales will be hindered because economies of scales is best utilized with fixed capital. Therefore, with the increase in sales volume the cost of per unit fixed assets will decrease, disturbing the economies of scales and resulting in decreasing economies of scale.

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Answer:

Inventory                        $200,000    

Cash                                                      $50,000

Notes payable                                      $150,000

Explanation:

Data provided in the question:

Cost of the inventory purchased = $200,000

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For the remaining balance signed a note i.e = $200,000 - $50,000

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This transaction will be recorded as:

Inventory                        $200,000    

Cash                                                      $50,000

Notes payable                                      $150,000

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Step 3: Decision-Making and Goal Setting.

Step 4: Gaining Experience.

Step 5: Implementation.

Explanation:

A career is a professional endeavor undertaken during a specific period in one's life with the opportunity for growth. Picking a career is one of the most important things that most individuals do in life. It is therefor necessary to choose a career that is in line with one's interest, capabilities and passion. The following are steps to be followed in planning a career path, namely;

Step 1: Reflection and Self-Evaluation.

This is the first step involved in career planning. It involves the gathering of  information about oneself that will assist in choosing a career that matches one personality, interests, capabilities and goals.

Step 2: Exploration

Exploration involves looking into various alternative careers that matches one's personality. This step usually includes specific research on different careers to make a decision on a specific career that best fits one's requirements.

Step 3: Decision-Making and Goal Setting.

In this step, one decides on the specific career that they want to pursue. They also set achievable goals and timelines that the goals need to be achieved.

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