The CVP income statements shown below are available for Armstrong Company and Contador Company.

	Armstrong Co	Contador Co
Sales	$506,000	$506,000
Variable costs	242,000	55,000
Contribution margin	264,000	451,000
Fixed costs	164,000	351,000
Net income	$100,000	$100,000

Compute the degree of operating leverage for each company (Round answers to 2 decimal places):

	Degree of Operating Leverage
Armstrong	____________________
Contador	____________________

(b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company.

	Armstrong Company	Contador Company
	$	$
	$	$