Company A is a manufacturer with sales of $3,600,000 and a 60% contribution margin. Its fixed costs equal $1,740,000. Company B is a consulting firm with service revenues of $3,700,000 and a 25% contribution margin. Its fixed costs equal $480,000. Compute the degree of operating leverage (DOL) for each company. Which company benefits more from a 20% increase in sales.

Complete this question by entering your answers in the tabs below.

• DOL
• Company Benefits

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

Contribution Margin Income Statement
			Company A		Company B
Degree of Operating Leverage
Choose:	Numerator	/	Denominator	=	Ratio
		/		=	Degree of Operating Leverage
Company A
Company B