e Exercise (1 ONLY) COMPANY A $80,000 COMPANY B SALES SALES $80,000 TOTAL VARIABLE COSTS 20,000 TOTAL VARIABLE COSTS 60,000 CONTRIBUTION MARGIN CONTRIBUTION MARGIN 60,000 20,000 FIXED COSTS 50,000 $10,000 FIXED COSTS 10,000 $10,000 OPERATING INCOME OPERATING INCOME Calculate the Operating Leverage Factor for each company. Operating Leverage Factor= CM/Operating Income OLF Company A 0 OLF Company B If Sales increases by 10 % for each company, by what percent will the Operating Income Increase? Hint: multiply 10% times the Operating Leverage Factor. Percent Increase, Co. A Percent Increase, Co. B 0 Operating Income, Co. A Hint: to calculate the new Operating Income, Co. B Operating Income, multiply (1+ Percent Increase) times original Operating Income. 0 Use the percent increase from answer 2 for this calculation. eck: SALES 88,000 SALES 88,000 TOTAL VARIABLE COSTS 22,000 TOTAL VARIABLE COSTS 66,000 CONTRIBUTION MARGIN 66,000 CONTRIBUTION MARGIN FIXED COSTS 22,000 50,000 FIXED COSTS 10,000 OPERATING INCOME 16,000 OPERATING INCOME 12,000 ALT OPER-LEVERAGE