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SunRise Inc. and SunSet Inc. have the following operating data: SunRise Inc. SunSet Inc. Sales $261,900 $720,500 Variable costs (105,100) (432,300) Contribution margin $156,800 $288,200
SunRise Inc. and SunSet Inc. have the following operating data: SunRise Inc. SunSet Inc. Sales $261,900 $720,500 Variable costs (105,100) (432,300) Contribution margin $156,800 $288,200 Fixed costs (107,800) (157,200) Operating income $49,000 $ 131,000 a. Compute the operating leverage for SunRise Inc. and SunSet Inc. Round the answers to one decimal place. SunRise Inc. 3.2 - 2.2 SunSet Inc. b. How much would operating income increase for each company if the sales of each increased by 20%? Dollars Percentage SunRise Inc. % SunSet Inc. than are SunSet Inc.'s. Thus, increases c. SunRise Inc.'s higher operating leverage means that its fixed costs are a larger percentage of in sales increase operating profit at a faster rate for SunRise Inc. than for SunSet Inc
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