Which of the following statements is true?
The degree of operating leverage in a company is smallest at the break-even point and increases as sales volumes rise.
The degree of operating leverage is computed by dividing sales by the contribution margin.
A company with high operating leverage will experience a larger reduction in net operating income in a period of declining sales volume than a company with low operating leverage.
Multiple Choice
Only statement I is true.
Only statement III is true.
All of the statements are true.
None of the statements are true.
