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LLLL L LLUP. Curly all of its drafting work is performed by skilled draftsmen. Mike Shanahan the owner is considering replacing the draftsmen with a

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LLLL L LLUP. Curly all of its drafting work is performed by skilled draftsmen. Mike Shanahan the owner is considering replacing the draftsmen with a computerized drafting system. However, before making the change. Mike would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP Income statements for each alternative Variable costs Contribution margin Fixed costs Net income Manual System $ 1.500.000 1.200 000 300.000 150,000 $ 150.000 Computerized System $ 1.500.000 900,000 600,000 450 000 150 000 Determine the degree of operating leverage for each alternative Degree of Operating Leverage Manual system Computerized System Which alternative would produce the higher net income sales increased by $300.000

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