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:

Tasty Kreme Krispy Kake

Estimated sales in units 27,000 28,000

Unit price 9 9

Variable cost per unit 6 4

Total fixed costs $40,500 $84,000

Required:

1.Compute the operating income and degree of operating leverage (DOL) for each company.(Round "Degree of operating leverage" to 1 decimal place.)

2. Assuming sales volume for each company will decline by 10% and that their cost structureswill not change, compute the percentage and dollar amount of the change in operating income for each company.(Negative values should be indicated by a minus sign.)