All categories

3 years ago

Would a firm with low degree of operating leverage need to sell more units of products to reach break-even point or less? Why?

Business

1 answer:

Leokris [45]3 years ago

6 0

Answer:

The company would need to sell less units of product.

Explanation:

Operating leverage measures the relationship between variable and fixed costs. Those companies with low operating leverage have a larger proportion of variable costs in its total costs structure and need to sell smaller amount of units in order to cover its fixed costs. Since breaking point is the point were profit is equal to zero and where sales income is equal to the total costs, consisting of both fixed and variable costs, it needs to sell less products, as its variable costs increase with the number of units sold.

You might be interested in

Fashion Mart Corp., a clothing company, offers the best quality material made using the finest threads and advanced textile mach

const2013 [10]

Answer:

a differentiation advantage

Explanation:

This scenario best illustrates a differentiation advantage. This is basically when a company is able to offer a product that, despite being the same as the competitor's product, is slightly different or offers something that the competitors do not. This small difference is what attracts the customers and increases profits. In this case, Fashion Mart Corp is differentiating their product by providing a guarantee of quality, which the competitors offering similar products cannot offer.

7 0

3 years ago

_____ is defined as a strategy in which a firm engages in several different businesses that may or may not be related in order t

Vlad1618 [11]

Answer:

Diversification

Explanation:

The key words here are 'several businesses'. A company engage in many businesses in order to mitigate or reduce its business risk, and also to create and add more value to customers. This offers a far advantage position than a stand alone entities who deal with only one product or service.

6 0

3 years ago

"The Federal Reserve raises the reserve requirement from 7 percent to 8 percent. Consequently banks must set aside more money an

joja [24]

Answer: a. Inflation

Explanation:

Inflation refers to the general rise in prices of items in an economy in a certain period of time. Inflation essentially erodes the value of the domestic currency of the economy in question.

Central Banks like the Fed can use Monetary policy to influence inflation. In this case they reduced the amount of money in the economy by reducing bank loans. This will ensure that people cannot spend too much which would increase demand and therefore increase prices.

By doing this, they have limited the likelihood of inflation.

6 0

4 years ago

When a financial institution provides a standardized financial product such as a mortgage, it is:________

Rufina [12.5K]

When a financial institution supplies a standardized financial product such as a mortgage, it is<u>: reducing transaction costs.</u>

<h3>What is an institution that manages and accommodates a nation's finances?</h3>

A central bank is a financial institution that is accountable for overseeing the monetary system and policy of a nation or group of nations, controlling its money supply, and setting interest rates.

<h3>Who uses financial institutions?</h3>

Almost everyone maintains a protection or checking account, uses debit or credit cards, or needs a loan. Online banking is an electronic way to view account training and pay bills via the Internet and an institution's website.

To learn more about financial institution ,refer

brainly.com/question/9297059

#SPJ4

6 0

1 year ago

On May 3, 2020, Windsor Company consigned 90 freezers, costing $480 each, to Remmers Company. The cost of shipping the freezers

aivan3 [116]

Answer:

a. Value of Ending inventory $ 22025

b. Profit= $ 10429

c. Amount Remitted to the Consignor $32454

Explanation:

Windsor Company

Goods Sent on Consignment 90 * $ 480= $ 43,200

Shipping Charges $ 850

Total $44050

Cost of One Freezer = $ 44050/ 90= $ 489.44

Cost of 45 Freezers= $22025

The ending inventory value is calculated by multiplying the unit costs with the units at hand.

a. Value of Ending inventory at the Hands of the Consignee = Units* Cost Price = 45 * $ 489.44= $ 22025

Sales by the Consignee 45* $ 780= $ 35100

b. Profit= Sales - (Cost + Expenses) = $ 35100- ($22025 + $2646)

= $ 10429

Profit is calculated by subtracting all the expenses and the cost from the sales

Installation Charges $330

Advertisement Costs $ 210

Commission (6% of 35100)= $2106

Total Expenses $2646

c. Amount Remitted to the Consignor = Sales - Expenses= ( $ 35100- $2646 )= $32454

3 0

3 years ago

Read 2 more answers