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A 10% change in a firm's revenues is likely to result in a change of more than 10% in the firm's operating income because?

A 10% change in a firm's revenues is likely to result in a change of more than 10% in the firm's operating income because:

1 not all of the firm's costs will change in proportion to the revenue change.

2 the firm has financial leverage.

3 the contribution margin ratio will change in proportion to the revenue change.

4 only fixed expenses will change in proportion to the revenue change.

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A 10% change in a firm's revenues is likely to result in a change of more than ...

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