The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.31 and fixed costs of $84,980. Every dollar of sales contributes 31 cents toward fixed costs and profit. The cost structure of a competitor, Oakfield Convenience Store, is dominated by fixed costs with a higher contribution margin ratio of 0.69 and fixed costs of $558,440. Every dollar of sales contributes 69 cents toward fixed costs and profit. Both companies have sales of $1,214,000 for the year.

Required:

Compare the two companies cost structures.

Suppose that both companies experience a 25 percent increase in sales volume. By how much would each companys profits increase?