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Company A is a manufacturer with current sales of $6,000,000 and a 60% contribution margin. Its fixed costs equal $2,600,000. Company B is a consulting
Company A is a manufacturer with current sales of $6,000,000 and a 60% contribution margin. Its fixed costs equal $2,600,000. Company B is a consulting firm with current service revenues of $4,500,000 and a 25% contribution margin. Its fixed costs equal $375,000 Compute the degree of operating leverage (DOL) for each company. Contribution Margin Income Statement Company A Company B Sales 6,000,000 4,500,000 $ Fixed costs 2,600,000 375,000 Degree of operating leverage Choose: Numerator Denominator Ratio Degree of Operating Leverage / Company A 0 Company B
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