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. Please answer B

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 $398,000 $398,000 Variable costs 319,000 157,000 Contribution margin 79,000 241,000 Fixed costs 29,000 191,000 Net income $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. (a1) Your answer is correct. Calculate each company's degree of operating leverage. (Round answers to 2 decimal places, e.g. 1.15.) Degree of Operating Leverage 1.58 Traditional Yams 4.82 Auto-Yams eTextbook and Media Attempts: 3 of 5 used (b) Your answer is incorrect. Determine the effect on each company's net income if sales decrease by 20% and if sales increase by 6%. Do not prepare income statements. (Round answers to 2 decimal places, e.g. 10.52. If % change is negative, enter amount with either a negative sign or parenthesis, e.g. -10.52 or (10.52).) % Change in Net Income Sales decrease by 20% Traditional Yams Auto-Yams Sales increase by 6% Traditional Yams Auto-Yams eTextbook and Media Save for Later Attempts: 1 of 5 used Submit Answer I % % % %