Company A is a manufacturer with sales of $3,200,000 and a 50% contribution margin. Its fixed costs equal $1,080,000. Company B is a consulting firm with service revenues of $3,100,000 and a 25% contribution margin. Its fixed costs equal $280,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales.

Compute the degree of operating leverage (DOL) for each company.

Which company benefits more from a 20% increase in sales.