HighTech Inc. and OldTime Co. compete within the same industry and had the following operating results in 2019: Sales Variable expenses Contribution margin Fixed expenses Operating income HighTech Inc. $3,400,000 680,000 $2,720,000 2,190,000 $ 530,000 oldTime Co. $3,400,000 2,040,000 $1,360,000 830,000 $ 530,000 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 $530,000 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 Required I Calculate the breakeven point for each firm in terms of revenue. (Do not round intermediate calculations.) Break-even sales revenue High Tech 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? The breakeven point for each firm is different because each firm has a different amount of fixed costs to be recovered. The breakeven point for both firms is same because both the firms have same amount of fixed costs to be recovered. 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.) Operating income (or loss) High Tech Inc. Old Time Co. 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) High Tech Inc. Old Time Co. 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. HighTech Inc. Old Time Co. Increase (Decrease) with 20% sales increase Increase (Decrease) with 20% sales decrease 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. HighTech Inc. has significantly more operating leverage than does OldTime Co. because its fixed costs are much higher and its contribution margin ratio is also much higher. OldTime Co. has significantly more operating leverage than does High Tech Inc. because its fixed costs are much higher and its contribution margin ratio is also much higher. 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.) Ratio of contribution margin High Tech Inc. Old Time Co. times times 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.) % High Tech Inc. Old Time Co. % 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 $530,000 reported in 2019 for each firm. (Do not round intermediate calculations.) High Tech Inc. Old Time Co. HighTech Inc. and OldTime Co. compete within the same industry and had the following operating results in 2019: Sales Variable expenses Contribution margin Fixed expenses Operating income HighTech Inc. $3,400,000 680,000 $2,720,000 2,190,000 $ 530,000 oldTime Co. $3,400,000 2,040,000 $1,360,000 830,000 $ 530,000 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 $530,000 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. 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? The answer calculated in requirement (h) is equal to the answer calculated in requirement (d). The answer calculated in requirement (h) is higher than the answer calculated in requirement (d). The answer calculated in requirement (h) is lower than the answer calculated in requirement (d)