If Company A is heavily labor-intensive and Company B is heavily capital-intensive which of the following is most likely to be true relative to the other company?

Question

Quizplus · Accepted Answer

Company B's heavy reliance on capital means that they are likely to have lower variable costs per unit when compared to Company A's heavy reliance on labor. This suggests that Company B's contribution margin per unit will be higher. However, it is important to note that this comparison is based on the assumption that both companies have similar selling prices, fixed costs, and production volumes.

If Company a Is Heavily Labor-Intensive and Company B Is