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    Question

    Operating risk is most likely to increase as a result

    of:
    A An increase in sale risk Correct Answer Incorrect Answer
    B Increase in the variability of cost Correct Answer Incorrect Answer
    C An increase in fixed production cost Correct Answer Incorrect Answer
    D An increase in the total cost Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    Operating risk refers to the uncertainty about operating earnings arising from fixed (operating) costs.

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