You Are Analyzing Becker Corporation and Newton Corporation and Have

question 64

Multiple Choice

You are analyzing Becker Corporation and Newton Corporation and have concluded that Becker 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? $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Relative Use of Fixed } \\\text { Costs as Opposed to } \\\text { Variable Costs }\end{array} & \begin{array} { c } \text { Percentage Change in } \\\text { Income Caused by } \\\text { a Change in Sales }\end{array} \\\hline 1 & \text { Greater for Becker } & \text { Gruater for Becker } \\\hline 2 & \text { Greater for Becker } & \text { Lower for Becker } \\\hline 3 & \text { Greater for Becker } & \text { Equal for both } \\\hline 4 & \text { Lower for Becker } & \text { Greater for Becker } \\\hline 5 & \text { Lower for Becker } & \text { Lower for Becker } \\\hline\end{array}$

• A)1
• B)2
• C)3
• D)4
• E)5

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Definitions:

Circularity

The degree to which a form or surface approaches a perfect circle, often a crucial factor in precision engineering.

Angularity

A condition of having a specified angle or orientation in relation to a datum or reference plane, used in precision manufacturing and machining.

Circularity

A geometric tolerance that limits the amount of variation from a perfect circle, often applied to cylindrical parts to ensure they rotate or fit smoothly.

Tolerance

The permissible limit or limits of variation in a physical dimension, a measured value or physical property of a material, manufactured object, system, or service.