The investment banker is interested in acquiring one of these companies. However the impact that each company's cost structure might have on its profitability, Instructions (5) Calculate each company's degree of operating leverage. Determine which compa more sensitive to changes in sales volume. (b) Determine the effect on each company's net income if sales decrease by 15% and not prepare income statements. (c) Which company should the investment banker acquire? Discuss. 10. Felde Company builds custom fishing lures for sporting goods stores. In its firs 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 $210,100 Felde Company sells the fishing lures for $25. During 2014, the company sold 80,000 produced 90,000 lures. Instructions (a) Assuming the company uses variable costing, calculate Felde's manufacturing cost (b) Prepare a variable costing income statement for 2014. (c) Assuming the company uses absorption costing, calculate Felde's manufacturing (d) Prepare an absorption costing income statement for 2014