Chapter 21 End of Chapter Project

Complete this project as a separate word or pdf file

Submit as a Canvas Assignment at the course website

Clearly Print Your Name and Assignment Name at the top of each page

Income statements for two different companies in the same industry are as follows:

Sales $ 500,000 $ 500,000

Less: Variable Costs 400,000 200,000

Contribution Margin 100,000 300,000

Less: Fixed Costs 50,000 250,000

Operating Income $ 50,000 $ 50,000

1.Calculate the degree of operating leverage for both companies.

2.Calculate the break-even point in $ for each company. Which company has the higher break-even point? Why?