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Company A is a manufacturer with sales of $4,000,000 and a 60% contribution margin. Its fixed costs equal $1,800,000. Company B is a consulting firm
Company A is a manufacturer with sales of $4,000,000 and a 60% contribution margin. Its fixed costs equal $1,800,000. Company B is a consulting firm with service revenues of $3,900,000 and a 25% contribution margin. Its fixed costs equal $400,000. 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. Company Benefits DOL Compute the degree of operating leverage (DOL) for each company Contribution Margin Income Statement Company A Company B Sales Variable costs Contribution margin Fixed costs Degree of Operating Leverage Choose: Numerator Denominator Ratio Degree of Operating Leverage = Company A 0 Company B 0 Complete this question by entering your answers in the tabs below. Company Benefits DOL Which company benefits more from a 20% increase in sales. Which company benefits more from a 20% increase in sales DOL Company Benefits
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