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Exercise 20-16 An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Traditional Yams uses a labor-intensive approach,

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Exercise 20-16 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 Sales Variable costs Contribution margin Fixed costs Net income Auto-Yams $400,000 400,000 160,000 240,000 190,000 50,000 320,000 80,000 30,000 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 Calculate each company's degree of operating leverage. (Round answers to 2 decimal places, e.g. 1.15.) Degree of Operating Levera Traditional Yams Auto-Yams

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