1. Company A has current sales of $6,000,000 and a 35% contribution margin. Its fixed costs are $800,000. Company B is a service firm with current service revenue of $4,500,000 and a 15% contribution margin. Company Bs fixed costs are $450,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 15% increase in sales? Explain why.

Company ACompany BSales$6,000,000$4,500,000Contribution margin (in dollars) Fixed costs$800,000$450,000Net income (loss) Operating leverage Change in sales (15%)