COMPANY A COMPANY B SALES $80,000 SALES $80,000 TOTAL VARIABLE COSTS 20,000 TOTAL VARIABLE COSTS 60,000 CONTRIBUTION MARGIN 60,000 CONTRIBUTION MARGIN 20,000 FIXED COSTS 50,000 FIXED COSTS 10,000 OPERATING INCOME $10,000 OPERATING INCOME $10,000 1. Calculate the Operating Leverage Factor for each company. Operating Leverage Factor= CM/Operating Income 2. If Sales increases by 10% for each company, by what percent will the Operating Income Increase? Hint: muitipiy 10% times the Operating Leverage Factor. Percent Increase, Co. A :I 0 Percent Increase, Co. B :I 0 3. Operating Income, Co. A :I 0 Operating Income, Co. B :I 0 Hint: to caicuiate the new Operating income, muitipiy (1+ Percent increase} times originai Operating Income. Use the percent increase from answer 2 for this calculation. Check: SALES 88,000 SALES 88,000 TOTAL VARIABLE COSTS 22,000 TOTAL VARIABLE COSTS 66,000 CONTRIBUTION MARGIN 66,000 CONTRIBUTION MARGIN 22,000 FIXED COSTS 50,000 FIXED COSTS 10,000 OPERATING INCOME 16,000 OPERATING INCOME 12,000