the relative proportion of its fixed and variable costs the greater the proportion of these costs in a firm's cost structure, the greater the impact on profit will be from a given percentage change in sales revenue the extent to which an organization uses fixed costs in its cost structure; greatest in firms with a large proportion of fixed costs, low proportion of variable costs, and the resulting high contribution-margin ratio used to measure a firm's operating leverage at a particular sales volume; measures the percentage impact on net income of a given percentage change in sales revenue = contribution margin / net income activity-based costing CVP analysis recognizes:  

1. cost structure

the relative proportion of its fixed and variable costs

2. fixed costs

the greater the proportion of these costs in a firm's cost structure, the greater the impact on profit will be from a given percentage change in sales revenue

3. operating leverage

the extent to which an organization uses fixed costs in its cost structure; greatest in firms with a large proportion of fixed costs, low proportion of variable costs, and the resulting high contribution-margin ratio

4. operating leverage factor

used to measure a firm's operating leverage at a particular sales volume; measures the percentage impact on net income of a given percentage change in sales revenue

5. operating leverage factor

= contribution margin / net income

6. multiple cost drivers

activity-based costing CVP analysis recognizes: