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stiks02 [169]
2 years ago
11

Adams, Inc. has sales of $100,000 with a contribution margin of $60,000 and net income of $20,000. Baron, Inc. has sales of $110

,000 with a contribution margin of $44,000 and net income of $22,000. Which of the following statements are correct? Multiple select question. If sales fall, Baron will experience a greater decrease in income than Adams. Baron's net income grows twice as fast as its sales. Adams has a higher degree of operating leverage than Baron.
Business
1 answer:
Morgarella [4.7K]2 years ago
7 0

The true statement is that Adams has a higher degree of operating leverage than Baron.

<h3>What is a operating leverage?</h3>

The  cost-accounting formula is used to measures the degree a project can increase the operating income by increasing revenue.

Here, the degree of operating leverage is for Adams, Inc is <u>3</u> and for Baron, Inc. is 2.

Hence, the true statement is that Adams has a higher degree of operating leverage than Baron.

Therefore, the Option C is correct.

Read more about operating leverage

<em>brainly.com/question/15869128</em>

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