Company A Company B Sales revenue $ 1,000 $ 2,000 Cost of goods sold (600) (1,100) Gross margin 400 900 Operating expenses (220) (700) Operating income 180 200 Gain on sale of equipment 0 0 Net income $ 180 $ 200

Assume both companies receive a $1,000 increase in sales and the return on sales ratio does not change. Under these circumstances

Company A's operating income would increase by $180. Company B's operating income would increase by $200. Both answers are correct. Neither answer is correct.