Compute the degree of operating leverage for both periods as above. Comment the results.

ELI Plc. is contemplating an investment in an automated surgical system. In order to have the automated system, the company needs new equipment that would employ a computer robotic system operated by a technician. The company requested an analysis of the old technology versus the new technology. The old technology machine was used in the old period while the new technology machine was used in the new period. The accounting department has prepared the following income statements for use in the analysis. Old Period New Period (RM) (RM) Sales 3,000,000 3,000,000 Variable costs 1,600,000 700,000 Contribution Margin 1,400,000 2,300,000 Fixed costs 1,000,000 1,900,000 Operating Income 400,000 400,000