Exercise 16.21 Operating Leverage Objective 1, 5 Income statements for two different companies in the same industry are as follows: Trimax, Inc. S500,000 250,000 $250,000 200,000 Quintex, Inc. $500,000 100,000 $400,000 350,000 S 50,000 Sales Less: Variable costs Contribution margin Less: Fixed costs Operating income Required: L Compute the degree of operating leverage for each company 2. Compute the break-even point for each company. Explain why the break-even point for Quintex, Inc., is higher. 3. Suppose that both companies experience a 50 percent increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Quintex's profits is so much greater than that of Trimax