Beck Ltd and Bryant Ltd have the following operating data:

	Beck Ltd ($)	Bryant Ltd ($)
Sales	1,250,000	2,000,000
Variable costs	750,000	1,250,000
Contribution margin	500,000	750,000
Fixed costs	400,000	450,000
Income from operations	100,000	300,000

Required:

1. What is the operating leverage for Beck Ltd and Bryant Ltd?
2. If the sales of each company increased by 20%, how much would income from operations increase for each company?
3. Why is there a difference in the increase in income from operations for the two companies? Explain.