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Operating leverage Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Samir Inc. Sales $252,500 $648,000 Variable costs (101,300) (388,800) Contribution
Operating leverage Asha Inc. and Samir Inc. have the following operating data: Asha Inc. Samir Inc. Sales $252,500 $648,000 Variable costs (101,300) (388,800) Contribution margin $151,200 $259,200 Fixed costs (97,200) (115,200) Operating income $54,000 $144,000 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 15%? If required, round answers to nearest whole number. Asha Inc. Samir Inc. $ $ Dollars c. The difference in the increases Percentage % % of operating income is due to the difference in the operating leverages. Asha Inc.'s higher percentage of contribution margin than are Samir Inc.'s. leverage means that its fixed costs are a larger operating
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