alleryStart learning →If unit variable cost is constant, rising sales make the fixed-to-total cost ratio do what?
ATurn negative
BStay constant
CRise sharply
DFall steadily
Answer & Solution
Correct answer: D. Fall steadily
Fixed cost stays put while variable cost grows with output, so fixed cost becomes a smaller share of total cost.
Keep practising Leverage (Finance)
Browse all Leverage (Finance) questions for CA Inter, or explore more Financial Management topics.
Related questions
DFL is 1.8 and EBIT rises 10% with no preference dividend. EPS rises by?Raising interest expense while EBIT stays fixed does what to DFL?A firm with no debt and no preference capital has a DFL of what?Interest of Rs 60,000 against EBIT of Rs 1,20,000 gives a DFL of?Firm B has DOL 4 and firm A has DOL 2. Sales rise 10%. B's EBIT rises by?A firm with no fixed costs sees sales rise 10%. EBIT rises by what?1,000,000 units sell at Rs 50; variable cost Rs 10; fixed cost Rs 1 crore. DOL?DOL is 1.33 and sales rise 15%. EBIT rises by about what?