Income statements for two different companies in the same industry are as follows:

Sales $ 500,000 $ 500,000

Less: Variable Costs 400,000 200,000

Contribution Margin 100,000 300,000

Less: Fixed Costs 50,000 250,000

Operating Income $ 50,000 $ 50,000

1. Calculate the degree of operating leverage for both companies.

2. Calculate the break-even point in $ for each company. Which company has the higher break-even point? Why?