Do It! Review 6-4 a

Bergen Hospital is contemplating an investment in an automated surgical system. Its current process relies on the a number of skilled physicians. The new equipment would employ a computer robotic system operated by a technician. The company requested an analysis of the old technology versus the new technology. The accounting department has prepared the following CVP income statements for use in your analysis.

		Old		New
Sales		$3,108,000		$3,108,000
Variable costs		1,569,000		693,000
Contribution margin		1,539,000		2,415,000
Fixed costs		969,000		1,955,000
Net income		$570,000		$460,000

(a) Compute the degree of operating leverage for the company under each scenario. (Round answers to 2 decimal places, e.g. 15.72.)

		Degree of operating leverage
Old
New