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What is the effect on the intercept and slope of total cost

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Y Co., that changed from purchasing production equipment to allowing the vendor to install the equipment and Y Co. paid a per-unit fee to the vendor for each hour the equipment was used. Y Co., never quite knows how much sales demand, and therefore how much production volume they will face each period.

Required:

Problem 1: What is the effect on the intercept and slope of the total cost line of making this change?

Problem 2: What is the effect on the operating leverage?

Problem 3: How does the change affect the riskiness of Y Co.?

Reference no: EM132822594

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