16)

Company A is a manufacturer with current sales of $3,300,000 and a 60% contribution margin. Its fixed costs equal $1,450,000. Company B is a consulting firm with current service revenues of $3,200,000 and a 30% contribution margin. Its fixed costs equal $460,000.

Compute the degree of operating leverage (DOL) for each company.

A) Contribution Margin Income Statement B) Degree of Operating Leverage