The CVP income statements shown below are available for AX Company and ZY Company at

the beginning of $2020.$

Instructions

a$.$ Using the breakeven point in dollar, determine which company could be in risk?

b$.$ Determine the degree of operating leverage for each company.

c$.$ During $2020,$ both companies faced problems resulted in having a decline in sales by

$$50,000$ and that affected rapidly to the net income during that year. Which company

would produce less net income?