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 and Krispy Kake

Estimated sales in units: 20,000 and 35,000

Unit price: 6 and 8

Variable cost per unit: 3 and 3

Total fixed costs: 30,000 and 105,000

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.