An investment banker is analyzing two companies that specialize in the production and sale of gourmet cappuccino and chai mixes. Wildhorse Beans Co.uses a labor-intensive approach and Blossom Industries uses a mechanized system. Variable costing income statements for the two companies are shown below: Sales WildhorseBeans $1,000,000 632,500 Blossom Industries $1,000,000 282,500 717,500 Variable costs 367,500 Contribution margin Fixed costs Net income 192,500 542,500 $175,000 $175,000 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. (a) Your answer has been saved. See score details after the due date. Calculate each company's degree of operating leverage. (Round answers to 1 decimal place, eg. 15.5.) Degree of Operating Leverage Wildhorse Beans 2.1 Blossom Industries 4.1 Attempts: 1 of 1 used (b) Determine the effect on each company's net income. Do not prepare income statements. (Round answers to 1 decimal place, eg. 15.5%) If sales decrease by 10% Change in Net Income Wildhorse Beans % Blossom % If sales increase by 15%. Change in Net Income Wildhorse Beans % Blossom % Save for Later Attempts: 0 of 1 used Submit Answer Decrease Increase