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45 - Company A has a degree of operating leverage of 10, whereas, Company B has a degree of operating leverage of 5. Each company

45 - Company A has a degree of operating leverage of 10, whereas, Company B has a degree of operating leverage of 5. Each company has the same level of sales. Which of the following statements is true?

If sales increase by 10%, Company B would have a higher increase in before-tax profit.

If sales decrease by 10%, Company A would have a lower decrease in before-tax profit.

Company A has a higher relative amount of fixed costs in its cost structure than does Company

Company B has a higher relative amount of fixed costs in its cost structure than does Company

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