E6-14 The CVP income statements shown below are available for Armstrong Company and Contador Company. Sales Variable costs Contribution margin Fixed costs Net income Armstrong Co. $500,000 240,000 260,000 160,000 $100,000 Contador Co. $500,000 50,000 450,000 350,000 $100,000 Instructions (a) Compute the degree of operating leverage for each company and interpret your results. (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company. (c) Discuss how the cost structure of these two companies affects their operating lever- age and profitability