The Following Information Is for Companies M and N for the Most

question 69

Multiple Choice

The following information is for Companies M and N for the most recent year: $$\begin{array} { l l l } & \text { Company M } & \text { Company N } \\\text { Sales } & \$ 500,000 & \$ 500,000 \\\text { Variable costs } & \$ 300,000 & \$ 200,000 \\\text { Fixed costs } & \$ 50,000 & \$ 150,000\end{array}$$ Based on this information,which of the following statements is incorrect?

• A) N's magnitude of operating leverage is lower than M's.
• B) N would suffer more than M from an equal drop in sales revenue.
• C) N's cost structure carries greater risk and greater potential for profit.
• D) If N's sales increased by 20%, its net income would increase by 40%.

Understand ergonomic practices to prevent work-related injuries.

Comprehend the principles and practices of cybersecurity, including authentication and encryption.

Understand the principles and procedures of goodwill impairment testing.

Comprehend the consolidation process including elimination of unrealized profits in intercompany transactions.

---

Definitions:

Gauge Pressure

The measurement of pressure relative to ambient atmospheric pressure, used in various applications from tires to hydraulic systems.

Truck A/C System

The air conditioning system in a truck, designed to cool the cabin area for the comfort of the occupants.

Disposable Refrigerant Can

A single-use container used for holding refrigerant, typically for automotive air conditioning systems.

High Side

In refrigeration and air conditioning systems, it refers to the part of the system where the refrigerant is under high pressure, typically after compression.