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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-intens approach, and Auto-Yams
An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intens approach, and Auto-Yams uses a mechanized system. CVP income statements for the two companies are shown below. Traditional Yams Auto-Yams Sales Variable costs Contribution margin Fixed costs Net income $398,000 319,000 79,000 29,000 $398,000 157,000 241,000 191,000 $50,000 $50,000 The investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each company's cost structure might have on its profitability. (al) Calculate each company's degree of operating leverage. (Round answers to 2 decimal places, e.g. 1.15.) Degree of Operating Leverage Traditional Yams Auto-Yams By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor
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