Spring Company's cost structure is dominated by variable costs with a contribution margin ratio of 0.25 and fixed costs of $20,000. Every dollar of sales contributes 25 cents toward fixed costs and profit. The cost structure of a competitor, Winters Company, is dominated by fixed costs with a higher contribution margin ratio of 0.70 and fixed costs of $200,000. Every dollar of sales contributes 70 cents toward fixed costs and profit. Both companies have sales of $400,000 per month. Required: a. Compare the two companies' cost structures. b. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits increase? Complete this question by entering your answers in the tabs below. Required A Required B Compare the two companies' cost structures. SPRING COMPANY WINTERS COMPANY Amount Percentage Amount Percentage Sales $ 400,000 100 % $ 400,000 100 % Variable cost 300,000 75 120,000 30 Contribution $ 100,000 25 % 280,000 70 % margin Fixed costs 20,000 0 200,000 0 Operating profit $ 80,000 0 % $ 80,000 0 % Required A Required B Suppose that both companies experience a 15 percent increase in sales volume. By how much would each company's profits increase? Spring Company's profits increase by $ 19 Winter Company's profits increase by $ 53