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

question 102

Multiple Choice

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

• A)M's magnitude of operating leverage was lower than N'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%.

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Definitions:

Self-recognition

The ability to identify oneself as an individual, separate from the environment and other individuals, often tested through mirror experiments.

Self-understanding

The awareness or knowledge one has about their own character, feelings, motives, and desires.

Contradictory Nature

The inherent conflict or inconsistency found within a situation, concept, or personality.

Self Fluctuates

The concept that an individual's perception of self or identity can change or vary over time.