Firm A employs a high degree of operating leverage; - 4671

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Firm A employs a high degree of operating leverage; Firm B takes a more conservative approach. Which of the following comparative statements about firms A and B is true? 

A) A has a lower break-even point than B, but A's profit grows faster after the break-even. 

B) A has a higher break-even point than B, but A's profit grows slower after the break-even. 

C) B has a lower break-even point than A, but A's profit grows faster after break-even. 

D) B has a lower break-even point than A, and profit grows the same rate for both companies after the breakeven point. 

 

Answer: C Difficulty: Hard Type: Application 

 
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