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The CVP income statements shown below are available for XYZ Company and ABC Company. Sales revenue Variable costs Contribution margin Fixed costs Operating income XYZ
The CVP income statements shown below are available for XYZ Company and ABC Company. Sales revenue Variable costs Contribution margin Fixed costs Operating income XYZ Co. $885,000 520,000 365,000 265,000 $100,000 ABC Co. $885,000 292,700 592,300 492,300 $100,000 Calculate each company's degree of operating leverage. (Round answers to 4 decimal places, e.g. 1.2531.) Degree of operating leverage 3.65 XYZ ABC 5.923 Determine which company's cost structure makes it more sensitive to changes in its sales volume. LINK TO TEXT Determine the effect on each company's operating income if sales decrease by 10%. XYZ: Operating income would by s to become $ ABC: Operating income would to become $
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