ECONOMICS

Detailed explanation-1: -The term “high operating leverage” is used to describe companies with relatively high fixed costs.

Detailed explanation-2: -The margin of safety is the amount by which sales can decrease before losses are incurred by the company. The margin of safety percentage is equal to the margin of safety in dollars divided by total contribution margin.

Detailed explanation-3: -An organization’s operating leverage is high when it has a low proportion of variable costs in its total costs. unit volume doesn’t change and there are no other changes in its cost structure. higher than the break-even point for an organization with a high operating leverage. and sales remain unchanged.

Detailed explanation-4: -Answer and Explanation: Cost-Volume-Profit analysis does not assume that variable cost remains the same over the relevant range but it assumes that variable cost do not have a relevant range and it remains the same regardless of how many units of output is made.