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Sales Sales Sales Variable costs Amount $170,000 85,000 100% 50 Amount $170,000 51,000 100% 30 70% Contribution margin Fixed costs $ 85,000 23,800 $119,000 50,800

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Sales Sales Sales Variable costs Amount $170,000 85,000 100% 50 Amount $170,000 51,000 100% 30 70% Contribution margin Fixed costs $ 85,000 23,800 $119,000 50,800 Operating profit $61,200 $ 68,200 Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. (Round your answers to 3 decimal places.) Company A Company B Degree of operating leveragee 1-b. If sales increase from the present level, which company benefits more? Company A Company B 2. Assume that sales rise 15% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company. (Do not round intermediate calculations. Input your answers as whole percentages rounded to two decimal places (i.e., .1567 = 15.67%)) Company A Company B Increase in profit

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