The CVP income statements shown below are available for Grissom Company and Moran Company.

Instructions
(a) Compute the degree of operating leverage for each company and interpret your results.
(b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company.
(c) Discuss how the cost structure of these two companies affects their operating leverage andprofitability.

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Sales revenue Variable costs Contribution margin Fixed costs Net income Grissom Co. Moran Co $600,000 $600,000 80,000 520,000 370,000 $150,000 280,000 320,000 170,000 $150,000