You Are Analyzing Becker Corporation and Newton Corporation and Have

Multiple Choice

You are analyzing Becker Corporation and Newton Corporation and have concluded that Becker has a higher operating leverage factor than Newton. Which one of the following choices correctly depicts (1) the relative use of fixed costs (as opposed to variable costs) for the two companies and (2) the percentage change in income caused by a change in sales? $\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Relative Use of Fixed } \\\text { Costs as Opposed to } \\\text { Variable Costs }\end{array} & \begin{array} { c } \text { Percentage Change in } \\\text { Income Caused by } \\\text { a Change in Sales }\end{array} \\\hline 1 & \text { Greater for Becker } & \text { Gruater for Becker } \\\hline 2 & \text { Greater for Becker } & \text { Lower for Becker } \\\hline 3 & \text { Greater for Becker } & \text { Equal for both } \\\hline 4 & \text { Lower for Becker } & \text { Greater for Becker } \\\hline 5 & \text { Lower for Becker } & \text { Lower for Becker } \\\hline\end{array}$

A) 1
B) 2
C) 3
D) 4
E) 5