Two firms, A and B, both produce widgets. The price of widgets is $1 each. Firm A has total fixed costs of $500,000 and variable costs of 50 per widget. Firm B has total fixed costs of $240,000 and variable costs of 75 per widget. The corporate tax rate is 40%. If the economy is strong, each firm will sell 1,200,000 widgets. If the economy enters a recession, each firm will sell 1,100,000 widgets

a) What is the after-tax profit for firms A and B in both scenarios of recession and economic boom? b) Calculate firm A's degree of operating leverage. What is firm A's degree of operating leverage?