Exercise 3-35 (Static) Analysis of Cost Structure (LO 3-2) Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.20 and fixed costs of $60,000. Every dollar of sales contributes 20 cents toward fixed costs and profit. The cost structure of a competitor, Winters Company, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and fixed costs of $310,000. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $500,000 per month. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience an 8 percent increase in sales volume. By how much would each company's profits increase? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures. SPRING COMPANY WINTERS COMPANY Amount Percentage Amount Sales $ 500,000 80 % $ 500,000 Percentage 8 % Variable cost 400,000 80 150,000 30 Contribution $ 100,000 0 % $ 350,000 0 % margin Fixed costs 60,000 20 x 310,000 70 Operating profit $ 40,000 20 % 40,000 70%