The following CVP income statements are available for Al-Quds Corp. which has two plants A and B.

			Plant A	Plant B
Sales Revenue			800,000	800,000
Variable Cost			350,000	210,000
Contribution Margin			450,000	590,000
Fixed Cost			220,000	450,000
Net Income			230,000	140,000

Instructions

1. Compute the degree of operating leverage for the two plants (you can use the following table).

2. Determine which plant's cost structure contains more risk to change in sales volume and Why?

3. Determine the effect on each plant's net income if sales revenue increased by 10%.