Exercise 19-16 a1, b (Video) (Part Level Submission) An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intensive approach, and Auto-Yams uses a mechanized system. CVP income statements for the two companies are shown below. Traditional Yams Auto-Yams Sales Variable costs $402,000 $402,000 324,000 160,000 Contribution margin Fixed costs 78,000 242,000 Net income 28,000 $50,000 192,000 $50,000 The investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each company's cost structure might have on its profitability. (a1) Calculate each company's degree of operating leverage. (Round answers to 2 decimal places, e.g. 1.15.) Traditional Yams Auto-Yams Degree of Operating Leverage (b) Determine the effect on each company's net income if sales decrease by 20% and if sales increase by 7%. Do not prepare income statements. (Round answers to 2 decimal places, e.g. 10.52. If % change is negative, enter amount with either a negative sign or parenthesis, e.g. -10.52 or (10.52).) % Change in Net Income Sales decrease by 20 % % Traditional Yams Auto-Yams Sales increase by 7% Traditional Yams Auto-Yams % %