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Solve this problem in its entirety only Both Diana Prince of Wonder Women Manufacturing and Bruce Wayne of Batman Manufacturing interested in increasing their sales.
Solve this problem in its entirety only
Both Diana Prince of Wonder Women Manufacturing and Bruce Wayne of Batman Manufacturing interested in increasing their sales. Each has the same opportunity -to invest an additional $150,000 in marketing, which would then increase each of their sales by 10% (note that they are not competitors, so you can assume that the change in sales for one firm would not affect the change in sales for the other) are Current operating information for each firm is below: Wonder Woman Batman Manufacturing Manufacturing Current unit sales volume 300,000 300,000 Dollar sales $3,000,000 $3,000,000 2,550,000 $450,000 370,000 $80,000 Variable costs 300,000 Contribution margin $2,700,000 $2,620,000 $80,000 Fixed costs Operating income Required: 1. What would be the effect of the investment on the operating income at Wonder Women Manufacturing? 2. What would be the effect of the investment on the operating income at Batman Manufacturing? 3. Calculate the operating leverage for each company? 4. How does the degree of operating leverage help explain whether each firm should consider the additional investmentStep by Step Solution
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