2.1

Operating Leverage SunRise Inc. and SunSet Inc. have the following operating data: SunRise Inc. SunSet Inc. Sales $285,600 $912,000 (547,200) Variable costs (114,600) Contribution margin $364,800 $171,000 (114,000) (212,800) Fixed costs $57,000 Operating income $152,000 a. Compute the operating leverage for SunRise Inc. and SunSet Inc. Round the answers to one decimal place. SunRise Inc. SunSet Inc. b. How much would operating income increase for each company if the sales of each increased by 10%? Dollars Percentage SunRise Inc. SunSet Inc. c. SunRise Inc.'s operating leverage means that its than are SunSet Inc.'s. Thus, increases in sales increase costs are a larger percentage of rate for SunRise Inc. than for SunSet Inc. operating profit at a