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Shown here are condensed income statements for two different companies ( assume no income taxes ) . Miller Company Sales $ 1 , 0 0

Shown here are condensed income statements for two different companies (assume no income taxes).
Miller Company
Sales $ 1,000,000
Variable expenses (80%)800,000
Income before interest 200,000
Interest expense (fixed)60,000
Net income $ 140,000
Weaver Company
Sales $ 1,000,000
Variable expenses (60%)600,000
Income before interest 400,000
Interest expense (fixed)260,000
Net income $ 140,000
4. What happens to each companys net income if sales decrease by 10%?5. What happens to each companys net income if sales decrease by 40%?6. Which company would have a greater ability to pay interest expense if sales were to decrease?

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