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Two companies, TastyKreme and Krispy Kake, have different cost structures as follows: Estimated sales in units Unit price Variable cost per unit Total fixed costs

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Two companies, TastyKreme and Krispy Kake, have different cost structures as follows: Estimated sales in units Unit price Variable cost per unit Total fixed costs TastyKreme 25,000 7 4 $ 37,500 Krispy Kake 30,000 7 2 $ 90,000 Required: 1. Compute the operating income and degree of operating leverage (DOL) for each company. (Round "Degree of operating leverage" to 1 decimal place.) 2. Assuming sales volume for each company will decline by 10% and that their cost structures will not change, compute the percentage and dollar amount of the change in operating income for each company. (Negative values should be indicated by a minus sign.) Tasty Kreme Krispy Kake 1. Operating income Degree of operating leverage 2. Percentage change in operating income Dollar change in operating income % %

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