You are analyzing Barroz Corporation and Newton Corporation and have concluded that Barroz has a higher operating leverage factor than Newton. Which one of the following choices correctly depicts (1) the relative use of fixed costs (as opposed to variable costs) for the two companies and (2) the percentage change in income caused by a change in sales? Relative Use of Fixed Costs as Opposed to Variable CostsPercentage Change in Income Caused by a Change in SalesA.Greater for BarrozGreater for BarrozB.Greater for BarrozLower for BarrozC.Greater for BarrozEqual for BothD.Lower for BarrozGreater for BarrozE.Lower for BarrozLower for Barroz
A. Choice A
B. Choice B
C. Choice C
D. Choice D
E. Choice E
Answer: A
Business
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