Operating leverage, margin of safety, and cost behavior
What is the accounting concept to explain how a 3% decline in sales could cause a 21% decline in profits. Also, discuss the effect of declining sales on an organization's margin of safety.
© BrainMass Inc. brainmass.com October 10, 2019, 2:19 am ad1c9bdddfhttps://brainmass.com/business/management-accounting/operating-leverage-margin-of-safety-and-cost-behavior-371636
Solution Summary
Response is 302 words and a diagram so you can "see" the concepts. Example given in addition to problem posed. Discussion is in everyday language suitable for novice.
$2.19