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An investment banker is analyzing two companies that specialize in the production and sale of candied applas. Old-Fashioned Apples uses a labour-intensive approach, and Mech-Apple
An investment banker is analyzing two companies that specialize in the production and sale of candied applas. Old-Fashioned Apples uses a labour-intensive approach, and Mech-Apple uses a mechanized system. Variable costing income statements for the two companies are shown below: The itvestment banker wants to acguire one of these companis. Howevar, she is cancerned about the impact that each company's cost structure might have on its profitability. Calculate each company's degres of aperating lavarage. (Round answers to 2 decimal places, e.8. 15.25.) Determine which campany's coct structure makss it mare sensitive to changes in its salss volume. Present your angwar in terms of the contritution margin ratio. will ba more sensitive to changes in sales volume. Determine the effect on each company's operating income if (1) Sales decrease by 15\%. (Round percentages to 2 decimal places, e.g. 15.25\%.) (2) Sales increase by 10\%. (Round percentages to 2 decimal places, e.g. 15.25\%.) Old-Fashioned:Mech-Apple:OperatingincomeOperatingincomebyby%or$%or$ An investment banker is analyzing two companies that specialize in the production and sale of candied applas. Old-Fashioned Apples uses a labour-intensive approach, and Mech-Apple uses a mechanized system. Variable costing income statements for the two companies are shown below: The itvestment banker wants to acguire one of these companis. Howevar, she is cancerned about the impact that each company's cost structure might have on its profitability. Calculate each company's degres of aperating lavarage. (Round answers to 2 decimal places, e.8. 15.25.) Determine which campany's coct structure makss it mare sensitive to changes in its salss volume. Present your angwar in terms of the contritution margin ratio. will ba more sensitive to changes in sales volume. Determine the effect on each company's operating income if (1) Sales decrease by 15\%. (Round percentages to 2 decimal places, e.g. 15.25\%.) (2) Sales increase by 10\%. (Round percentages to 2 decimal places, e.g. 15.25\%.) Old-Fashioned:Mech-Apple:OperatingincomeOperatingincomebyby%or$%or$
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