If a company has a higher percentage of employees with fixed compensation than variable compensation, what happens as revenues increase?

If a company has a higher percentage of employees with fixed compensation than variable compensation, what happens as revenues increase?
A . Compensation costs eventually stabilize and become a consistent percent of revenue.
B . Compensation costs and revenue increase at approximately the same rate.
C . Compensation costs eventually decrease as a percent of revenue, increasing profit growth.
D . Compensation costs remain the same as a percent of revenue until variable compensation costs exceed fixed compensation costs.

View Answer

Answer: C