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Operating leverage Asha Inc. and Samir Inc. have the following operating data: Samir Inc. Asha Inc. Sales $2,500,000 $4,000,000 Variable costs (1,500,000) (2,500,000) Contribution
Operating leverage Asha Inc. and Samir Inc. have the following operating data: Samir Inc. Asha Inc. Sales $2,500,000 $4,000,000 Variable costs (1,500,000) (2,500,000) Contribution margin $1,000,000 $1,500,000 Fixed costs (800,000) Operating income $200,000 (900,000) $600,000 a. Compute the operating leverage for Asha Inc. and Samir Inc. If required, round to one decimal place. Asha Inc. Samir Inc. b. How much would operating income increase for each company if the sales of each increased by 30%? Asha Inc. Samir Inc. c. The difference in the Samir Inc.'s. Dollars Percentage % % of operating income is due to the difference in the operating leverages. Asha Inc.'s operating leverage means that its fixed costs are a percentage of contribution margin than are
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