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The following sales and cost data (000s) are for two companies in the transportation industry ompany A Company B Percent of Sales Percent of Sales
The following sales and cost data (000s) are for two companies in the transportation industry ompany A Company B Percent of Sales Percent of Sales Sales Variable costs Amount $270,000 135,000 100% 50 Amount $270,000 81,000 100% 30 Contribution margin Fixed costs $135,000 32,400 $189,000 79,400 50% 70% Operating profit $102,600 $109,600 Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. (Round your answers to 3 decimal places.) Company A Company B Degree of operating leverage 1-b. If sales increase from the present level, which company benefits more? O Company A Company B 2. Assume that sales rise 5% 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 Increase in profit
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