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The following sales and cost data (in thousands) are for two companies in the transportation industry: Company A Sales Variable costs Contribution margin Fixed
The following sales and cost data (in thousands) are for two companies in the transportation industry: Company A Sales Variable costs Contribution margin Fixed costs Operating profit Company B Percent of Percent of Amount Sales Amount Sales $220,000 100% $ 220,000 100% 110,000 50 66,000 30 $110,000 50% $ 154,000 70% 15,400 52,400 $ 94,600 $ 101,600 Required: 1-a. Calculate the degree of operating leverage (DOL) for each company. 1-b. If sales increase from the present level, which company benefits more? 2. Assume that sales rise 20% in the next year but that everything else remains constant. Calculate the percentage increase in profit for each company. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2 Calculate the degree of operating leverage (DOL) for each company. (Round your answers to 3 decimal places.) Degree of operating leverage Company A Company B 14 Req 18 >
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