The cost structure of Dennis's Retail Mart is dominated by variable costs with a contribution margin ratio of 0.34 and fixed costs of $61,000. Every dollar of sales contributes 34 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 0.66 and fixed costs of $597,800. Every dollar of sales contributes 66 cents toward fixed costs and profit. Both companies have sales of $1,220,000 for the year.

Required:

1. Compare the two companies cost structures.
2. Suppose that both companies experience a 15 percent increase in sales volume. By how much would each companys profits increase?