Q.2. Operating Leverage Riddle Inc. and Puzzle Inc. have the following operating data: Riddle Inc. Sales $2,500,000 Variable costs -1,000,000 Contribution margin $1,500,000 Fixed costs -1,000,000 Operating income $500,000 Puzzle Inc. $3,800,000 -1,200,000 $2,600,000 -1,300,000 $1,300,000 Required: A. Compute the operating leverage for Riddle Inc. and Puzzle Inc. If required, round to one decimal place. Hint: OL = CM/OI Riddle Inc. Puzzle Inc. B. How much would operating income increase for each company if the sales of each increased by 20%? Hints: Increase in percentage of Operating income = OL X % increase in sales Increase in dollars = Increase in % of Olx OL Dollars Percentage Riddle Inc. Puzzle Inc. C. The difference in the Choose an item. of operating income is due to the difference in the operating leverages. Riddle Inc.'s higher operating leverage means that its fixed costs are a Choose an item. percentage of contribution margin than are Puzzle Inc.'s