Which of the Following Statements Is Most Likely True If

question 31

Multiple Choice

Which of the following statements is most likely true if Red Inc.has an operating leverage of 2.0 while Blue Corp.has an operating leverage of 1.4?

• A) Red Inc.is selling its products for a higher sales price than Blue Corp.
• B) Red Inc.'s net income will be less sensitive to a change in sale volume than Blue Corp.
• C) Blue Corp.'s fixed costs in relation to variable costs are lower than Red Inc.'s.
• D) Blue Corp.has a lower contribution margin per unit than Red Inc.

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