Ringsmith Company is considering two different processes to make its product-process 1 and process 2. Process 1 requires Ringsmith to manufacture subcomponents of the product in-house. As a result, materials are less expensive, but fixed overhead is higher. Process 2 involves purchasing all subcomponents from outside suppliers. The direct materials costs are higher, but fixed factory overhead is considerably lower. Relevant data for a sales level of 30,000 units follow Process 1 Process 2 $8,010,000 2,700,000 $5,310,000 ,650,625 $1,659,375 $267 $90 $177 $8,010,000 4,200,000 3,810,000 1,428,750 $2,381,250 $267 $140 $127 Sales Variable expenses Contribution margin Less total fixed expenses Operating income Unit selling price Unit variable cost Unit contribution margin Required: 1. Compute the degree of operating leverage for each process. Round your answers to one decimal place Process 1 3.2 Process 2 1.6 2. Suppose that sales are 20 percent higher than budgeted. By what percentage will operating income increase for each process? Process 1 Process 2 64 % 32 V % What will be the increase in operating income for each system? Process 1 Process2 What will be the total operating income for each process? Process 1 Process 2 3. What if unit sales are 10 percent lower than budgeted? By what percentage will operating income decrease for each process? Process 1 32 V % Process 2 16 % What will be the total operating income for each process? Process 1 Process 2