Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $$1,000,000$ in a start$-$up firm.

He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year's

operations of the two firms he is considering and give him some business advice.

Required

a$.$ Use the contribution margin approach to compute the operating leverage for each firm.

b$.$ If the economy expands in coming years, Larson and Benson will both enjoy a $11$ percent per year increase in sales, assuming that

the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. $($Note:

Since the number of units increases, both revenue and variable cost will increase.$)$

c$.$ If the economy contracts in coming years, Larson and Benson will both suffer a $11$ percent decrease in sales volume, assuming that

the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. $($Note:

Since the number of units decreases, both total revenue and total variable cost will decrease.$)$

Complete this question by entering your answers in the tabs below.

If the economy expands in coming years, Larson and Benson will both enjoy a $11$ percent per year increase in sales, assuming

that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in

percentage. $($Note: Since the number of units increases, both revenue and variable cost will increase.$)$

Note: Amounts to be deducted should be indicated with a minus sign. Enter "Variable cost per unit" and "Percentage change"

amounts to $2$ decimal places. Round all other answers to the nearest whole dollar amount. Arnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $$1,000,000$ in a start$-$up firm.

He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year's

operations of the two firms he is considering and give him some business advice.

Required

a$.$ Use the contribution margin approach to compute the operating leverage for each firm.

b$.$ If the economy expands in coming years, Larson and Benson will both enjoy a $11$ percent per year increase in sales, assuming that

the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. $($Note:

Since the number of units increases, both revenue and variable cost will increase.$)$

c$.$ If the economy contracts in coming years, Larson and Benson will both suffer a $11$ percent decrease in sales volume, assuming that

the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. $($Note:

Since the number of units decreases, both total revenue and total variable cost will decrease.$)$

If the economy contracts in coming years, Larson and Benson will both suffer a $11$ percent decrease in sales volume,

assuming that the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in

percentage. $($Note: Since the number of units decreases, both total revenue and total variable cost will decrease.$)$

Note: Amounts to be deducted should be indicated with a minus sign. Enter "Variable cost per unit" and "Percentage change"

amounts to $2$ decimal plaArnold Vimka is a venture capitalist facing two alternative investment opportunities. He intends to invest $$1,000,000$ in a start$-$up firm.

He is nervous, however, about future economic volatility. He asks you to analyze the following financial data for the past year's

operations of the two firms he is considering and give him some business advice.

Required

a$.$ Use the contribution margin approach to compute the operating leverage for each firm.

b$.$ If the economy expands in coming years, Larson and Benson will both enjoy a $11$ percent per year increase in sales, assuming that

the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. $($Note:

Since the number of units increases, both revenue and variable cost will increase.$)$

c$.$ If the economy contracts in coming years, Larson and Benson will both suffer a $11$ percent decrease in sales volume, assuming that

the selling price remains unchanged. Compute the change in net income for each firm in dollar amount and in percentage. $($Note:

Since the number of units decreases, both total revenue and total variable cost will decrease.$)$

Complete this question by entering your answers in the tabs below.

Use the contribution margin approach to compute the operating leverage for each firm.

Note: Round your answers to $2$ decimal places.