The following sales and cost data (000s) are for two companies in the transportation industry:

	Company A							Company B
	Amount			Percent of Sales				Amount			Percent of Sales
Sales	$	240,000			100	%		$	240,000			100	%
Variable costs		120,000			50				72,000			30
Contribution margin	$	120,000			50	%		$	168,000			70	%
Fixed costs		21,600							62,600
Operating profit	$	98,400						$	105,400

Required:

1-a.

Calculate the degree of operating leverage (DOL) for each company. (Round your answers to 3 decimal places.) For company A and B.

1-b.

If sales increase from the present level, which company benefits more?

Company A

Company B

2.

Assume that sales rise 10% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company. (Do not round intermediate calculations. Input your answers as whole percentages rounded to two decimal places (i.e., .1567 = 15.67%)) Company A % Company B%