Companies a and B Are in the Same Industry and Are

question 61

Multiple Choice

Companies A and B are in the same industry and are identical except for cost structure.At a volume of 50,000 units,the companies have equal net incomes.At 60,000 units,Company A's net income would be substantially higher than B's.Based on this information,

• A) Company A's cost structure has more variable costs than B's.
• B) Company A's cost structure has higher fixed costs than B's.
• C) Company B's cost structure has higher fixed costs than A's.
• D) At a volume of 50,000 units, Company A's magnitude of operating leverage was lower than B's.

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Definitions:

Compensation

Payment or reward given for services rendered or harm suffered.

Tort Action

A legal proceeding arising from a wrongful act, leading to civil liability, rather than stemming from a contract dispute or criminal case.

Compensation

Payment or reward given for services rendered or damages incurred.

Tortfeasor

A person or party that has committed a tort, which is a wrongful act leading to legal liability.