The investment Banker is interested in acquiring one of these companies the impact that each company's cost structure might have on its profitabi Instructions (9) Calculate each company's degree of operating leverage. Determine wh more sensitive to changes in sales volume. (b) Determine the effect on each company's net income if sales decrease not prepare income statements. (c) Which company should the investment banker acquire? Discuss. 10. Felde Company builds custom fishing lures for sporting goods stores. the company incurred the following costs. Variable costs per Unit Direct materials $7.50 Direct labor $3.45 Variable manufacturing overhead $5.80 Variable selling and administrative expenses $3.90 Fixed Costs per Year Fixed manufacturing overhead $225,000 Fixed selling and administrative expenses S210,100 Felde Company sells the fishing lures for $25. During 2014, the companys produced 90,000 lures. Instructions a) Assuming the company uses variable costing, calculate Felde's manufact (b) Prepare a variable costing income statement for 2014 (c) Assuming the company uses absorption costing, calculate Felde's manu (d) Prepare an absorption costing income statement for 2014 The investment Banker is interested in acquiring one of these companies the impact that each company's cost structure might have on its profitabi Instructions (9) Calculate each company's degree of operating leverage. Determine wh more sensitive to changes in sales volume. (b) Determine the effect on each company's net income if sales decrease not prepare income statements. (c) Which company should the investment banker acquire? Discuss. 10. Felde Company builds custom fishing lures for sporting goods stores. the company incurred the following costs. Variable costs per Unit Direct materials $7.50 Direct labor $3.45 Variable manufacturing overhead $5.80 Variable selling and administrative expenses $3.90 Fixed Costs per Year Fixed manufacturing overhead $225,000 Fixed selling and administrative expenses S210,100 Felde Company sells the fishing lures for $25. During 2014, the companys produced 90,000 lures. Instructions a) Assuming the company uses variable costing, calculate Felde's manufact (b) Prepare a variable costing income statement for 2014 (c) Assuming the company uses absorption costing, calculate Felde's manu (d) Prepare an absorption costing income statement for 2014