Degree of Operating Leverage, Percent Change in Profit Ringsmith Company is considering two different processes to make its product-process 1 and process 2. Process 1 requires Ringsmith to manufacture subcomponents of the product in-house. As a result, materials are less expensive, but fixed overhead is higher. Process 2 involves purchasing all subcomponents from outside suppliers. The direct materials costs are higher, but fixed factory overhead is considerably lower. Relevant data for a sales level of 28,000 units follow: Process 1 Process 2 Sales $7,504,000 $7,504,000 Variable expenses 2,492,000 3,920,000 Contribution margin $5,012,000 $3,584,000 Less total fixed expenses 3,557,915 1,465,940 Operating income $1,454,085 $2,118,060 Unit selling price $268 $268 Unit variable cost $89 $140 Unit contribution margin $179 $128 Required: 1. Compute the degree of operating leverage for each process. Round your answers to one decimal place. Use the rounded answers in subsequent calculations. Process 1 3.45 X Process 2 1.69 X