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 subcompone product in-house. As a result, materials are less expensive, but fixed overhead is higher. Process 2 involves purchasing all subcomponents from outside suppliers. 1 materials costs are higher, but foxed factory overhead is considerably lower. Relevant data for a sales level of 39,000 units follow! Process 1 Process 2 Sales $10,218,000 $10,218,000 Variable expenses 4,056,000 5,148,000 Contribution margin $6,162,000 $5,070,000 Less total fuced expenses 3,584,240 1.444,860 Operating income $2,577,760 $3,625,140 Unit selling price $262 Unit variable cost $104 Unit contribution margin $158 $130 $262 $133 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 Process 2 2. Suppose that sales are 20 percent higher than budgeted. By what percentage will operating income increase for each process? Process 1 Check My Work 5 more Check My Work uses remaining Previou