a. Calculate the margin of safety in dollars for each firm.

 b. Calculate the degree of operating leverage for each firm.

 c. Determine the operating income for each firm if sales increase by 20%.

Income statements for two different companies in the same industry are as follows: Company A $400,000 Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income 300,000 $100,000 50,000 $ 50,000 Company B $400,000 200,000 $200,000 150,000 $50,000