HighTech Inc. and Old Time Co. compete within the same industry and had the following operating results in 2019: Sales Variable expenses HighTech Inc. $3,300,000 660,000 $2,640,000 2,140,000 Old Time Co. $3,300,000 1,980,000 $1,320,000 820,000 Contribution margin Fixed expenses Operating income $ 500,000 $ 500,000 Required: a. Calculate the breakeven point for each firm in terms of revenue. b. What observations can you draw by examining the breakeven point of each firm given that they earned an equal amount of operating income on identical sales volumes in 2019? c. Calculate the amount of operating income (or loss) that you would expect each firm to report in 2020 if sales were to 1. Increase by 20%. 2. Decrease by 20%. d. Using the amounts computed in requirement c, calculate the increase or decrease in the amount of operating income expected in 2020 from the amount reported in 2019. e. Explain why an equal percentage increase (or decrease) in sales for each firm would have such differing effects on operating income. f. Calculate the ratio of contribution margin to operating income for each firm in 2019. g. Multiply the expected increase in sales of 20% for 2020 by the ratio of contribution margin to operating income for 2019 computed in requirement f for each firm. h. Multiply your answer in requirement g by the operating income of $500,000 reported in 2019 for each firm. i. Compare your answer in requirement h with your answer in requirement d. What conclusions can you draw about the effects of operating leverage from the steps you performed in requirements f, g, and h? Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Calculate the breakeven point for each firm in terms of revenue. (Do not round intermediate calculations.) Break-even sales revenue Required I HighTech Inc. Old Time Co. Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I What observations can you draw by examining the breakeven point of each firm given that they earned an equal amount of operating income on identical sales volumes in 2019? < Required A Required C1 > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Calculate the amount of operating income (or loss) that you would expect each firm to report in 2020 if sales were to increase by 20%.(Losses should be indicated by minus sign.) HighTech Inc. Old Time Co. Operating income (or loss) < Required B Required C2 > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Calculate the amount of operating income (or loss) that you would expect each firm to report in 2020 if sales were to decrease by 20%. (Losses should be indicated by minus sign.) Operating income (or loss) HighTech Inc. Old Time Co. < Required C1 Required D > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Using the amounts computed in requirement c, calculate the increase or decrease in the amount of operating income expected in 2020 from the amount reported in 2019. Increase (Decrease) with 20% sales increase Increase (Decrease) with 20% sales decrease HighTech Inc. Old Time Co. < Required C2 Required E > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Explain why an equal percentage increase (or decrease) in sales for each firm would have such differing effects on operating income. < Required D Required F > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Calculate the ratio of contribution margin to operating income for each firm in 2019. (Do not round intermediate calculations and round your final answers to 2 decimal places.) HighTech Inc. Old Time Co. Ratio of contribution margin times times < Required E Required G > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Multiply the expected increase in sales of 20% for 2020 by the ratio of contribution margin to operating income for 2019 computed in requirement f for each firm. (Do not round intermediate calculations and round your final answers to 2 decimal places.) HighTech Inc. Old Time Co. % % < Required F Required H > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Multiply your answer in requirement g by the operating income of $500,000 reported in 2019 for each firm. (Do not round intermediate calculations.) HighTech Inc. Old Time Co. < Required G Required I > Required A Required B Required C1 Required C2 Required D Required E Required F Required G Required H Required I Compare your answer in requirement h with your answer in requirement d. What conclusions can you draw about the effects of operating leverage from the steps you performed in requirements f, g, and h? < Required H Required