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An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intensive approach, and Auto-Yams

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An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intensive approach, and Auto-Yams uses a mechanized system. CVP income statements for the two companies are shown below. Traditional Yams Auto-Yams Sales $400,000 $400,000 320,000 160,000 Variable costs Contribution margin Fixed costs 80,000 240,000 30,000 190,000 Net income $50,000 $50,000 he investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each ompany's cost structure might have on its profitability 11) Calculate each company's degree of operating leverage. (Round answers to 2 decimal places, eg. 1.15.) Degree of Operating Leverage Traditional Yams estion 6 of 6

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