Question
Company A has a total contribution margin of $75,000 and Fixed Expenses of $55,000 for an income of $20,000. Company B has a total contribution
Company A has a total contribution margin of $75,000 and Fixed Expenses of $55,000 for an income of $20,000. Company B has a total contribution margin of $25,000 and Fixed Expenses of $5,000 for an income of $20,000. I. Which has a larger Degree of Operating Leverage? II. If both companies increase sales by $100, which company will have the higher amount of income? a. Company A has the larger Degree of Operating Leverage; Company A will have the higher income. b. Company A has the larger Degree of Operating Leverage; Company B will have the higher income. c. Company B has the larger Degree of Operating Leverage; Company A will have the higher income. d. Company B has the larger Degree of Operating Leverage; Company B will have the higher income.
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