tastykreme and krispy kake are both producers of baked goods, but each has followed a different production strategy. The differences in their strategies resulted in differences in their cost structure, as shown in the following table:

TastyKreme Krispy Kake

Estimated sales in units 29,000 24,000

Unit price 5 7

Variable cost per unit 2 2

Total fixed costs 43,500 72,000

a) Compute the operating income and degree of operating leverage for each company

b) Assuming sales volume for each company will decline by 10% and that their cost structures will not change, compute the percentage and dollar amount of the change in operating income for each company.