Understanding Operating Leverage

Operating leverage is an important concept in corporate finance that measures how sensitive a company's operating income is to changes in sales. It reflects the proportion of fixed costs in a company's cost structure. Companies with high operating leverage experience greater fluctuations in operating income with changes in sales. Consider a company with the following characteristics:

When sales increase, the contribution margin (sales minus variable costs) rises, potentially leading to a more than proportional increase in operating income. However, if sales decrease, the company must cover its fixed costs, which can lead to a significant decline in operating income. Given this concept, which of the following statements best illustrates an aspect of operating leverage?