Based on the Income Statements of the Three Following Retail

Multiple Choice

Based on the income statements of the three following retail businesses, which company has the highest operating leverage? $\begin{array}{|l|r|r|r|}\hline & \text { Alpha Company } & \text { Beta Company } & \text { Gamma Company } \\\hline \text { Revenue } & \$ 200,000 & \$ 200,000 & \$ 200,000 \\\hline \text { Variable costs } & (95,000) & (155,000) & (125,000) \\\hline \text { Contribution margin } & \$ 105,000 & \$ 45,000 & \$ 75,000 \\\hline \text { Fixed costs } & (80,000) & (20,000) & (50,000) \\\hline \text { Net income } & \$ 25,000 & \$ 25,000 & \$ 25,000 \\\hline\end{array}$

A) Alpha Company
B) Beta Company
C) Gamma Company
D) They all have same operating leverage