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If a Firm Doubled Its Level of Fixed Costs but Maintained

Question 40

Multiple Choice

If a firm doubled its level of fixed costs but maintained its operating leverage,then one explanation may be that:


A) depreciation expense increased to offset the increase.
B) sales revenue also doubled and the proportion of variable costs did not change.
C) sales revenues declined and the proportion of variable costs doubled.
D) pretax profits decreased.

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