The following information is for Companies M and N for the most recent year:

Company M

Sales $500,000

Variable Cost $300,000

Fixed Cost $50,000

Company N

Sales $ 500,000

Variable costs $ 200,000

Fixed costs $ 150,000

Based on this information, which of the following statements is incorrect?

Multiple Choice

Ns magnitude of operating leverage is lower than Ms.

N would suffer more than M from an equal drop in sales revenue.

N's cost structure carries greater risk and greater potential for profit.

If N's sales increased by 20%, its net income would increase by 40%.