Exercise 6-16 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 $391,000 $391,000 Variable costs 329,000 158,000 Contribution margin 62,000 233,000 Fixed costs 12,000 183,000 $50,000 $50,000 Net income 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) Your answer is correct. Calculate each company's degree of operating leverage. (Round answers to 2 decimal places, e.g. 1.15.) Degree of Operating Leverage Traditional Yams 1.24 Auto-Yams 4.66 Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION LINK TO TEXT VIDEO: SIMILAR EXERCISE By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 1 of 3 used Earn Maximum Points available only if you answer this question correctly in two attempts or less % (b) X Your answer is incorrect. Try again Determine the effect on each company's net income if sales decrease by 10% and if sales increase by 5%. 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 10% Traditional Yams 78.20 % X Auto-Yams 78.20 % Sales increase by 5% Traditional Yams 39.10 Auto-Yams 39.10 % Open Show Work Click if you would like to Show Work for this