The Fulcrum Company produces decorative swivel platforms for home televisions. If Fulcrum produces 40 million units, it estimates that it can sell them for $100 each. Variable production costs are $65 per unit and fixed production costs are $1.05 billion. Which of the following statements is most accurate? Holding all else constant, the Fulcrum Company would:
a. generate positive operating income if unit sales were 25 million.
b. have less operating leverage if fixed production costs were 10 percent greater than $1.05 billion.
c. generate 20 percent more operating income if unit sales were 5 percent greater than 40 million.
Ans: c. generate 20 percent more operating income if unit sales were 5 percent greater than 40 million.
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