(a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.)

(b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company.

The CVP income statements shown below are available for Armstrong Company and Contador Company. Sales Variable costs Contribution margin Fixed costs Net income Armstrong Co. Contador Co. $497,000 $497,000 246,000 50,000 251,000 447,000 151,000 347,000 $100,000 $100,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.) Degree of Operating Leverage Armstrong Contador (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company