Below are income statements that apply to three companies: Austin, Brown, and Freeman:

	Austin Co.	Brown Co.	Freeman Co.
Sales	$100	$100	$100
Variable costs	(10)	(20)	(30)
Contribution margin	$ 90	$ 80	$ 70
Fixed costs	(30)	(20)	(10)
Profit before taxes	$ 60	$ 60	$ 60

a.

Refer to Austin, Brown, and Freeman Companies. Within the relevant range, if sales go up by one unit for each firm, which firm will experience the greatest increase in net income?

Austin Company

Brown Company

Freeman Company

can't be determined from the information given

b.

Refer to Austin, Brown, and Freeman Companies. At sales of $100, which firm has the highest margin of safety?

		Austin Company
		Brown Company
		Freeman Company
		They all have the same margin of safety.