1. Degree of Operating Leverage Instructions: Use the CVP Income Statements below to answer the questions below the income statements. Madison Company CVP Income Statement 550,000 Sales Baylee Company CVP Income Statement Sales 550,000 Less: Variable costs 155,000 Contribution Margin 395,000 Less: Fixed Costs 345,000 Net Income (Net Loss) 50,000 Less: Variable costs Contribution Margin 370,000 180,000 Less: Fixed Costs 130,000 Net Income (Net Loss) 50,000 e. Prepare a CVP Income Statement for each company, proving the change in net income. Baylee Company CVP Income Statement Madison Company CVP Income Statement Sales Sales Less: Variable Costs Contribution Margin Less: Variable costs Contribution Margin Less: Fixed Costs Net Income (Net Loss) Less: Fixed Costs Net Income (Net Loss) f. In general, what does Degree of Operating Leverage tell about a company's cost structure sensitivity to a change in sales 1