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An investment banker is analyzing two companies that specialize in the production and sale of gourmet cappuccino and chal mixes Sunland Beans Co, uses a
An investment banker is analyzing two companies that specialize in the production and sale of gourmet cappuccino and chal mixes Sunland Beans Co, uses a labor-intensive approach and Carla Vista Industries uses a mechanized system. Variable costing Income statements for the two companies are shown below: Sales SunlandBeans $940,000 Carla Vista Industries $940,000 Variable costs 561,650 232,650 Contribution margin 378,350 707,350 Fixed costs 213,850 542,850 Net income $164,500. $164,500 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. (a) Calculate each company's degree of operating leverage. (Round answers to 1 decimal place, eg. 15.5) Sunland Beans Carla Vista Industries (b) Save for Later Degree of Operating Leverage Attempts: 0 of 1 used Submit
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