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Compute the degree of operating leverage for each company

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Reference no: EM133116760

Question - Information for two companies follows:

 

Skittles Company

Starburst Company

Sales

$4,244,800

$4,416,000

Contribution margin

2,764,800

1,376,000

Fixed costs

2,252,800

946,000

Required -

1. Compute the degree of operating leverage (DOL) for each company.

2. Which company is expected to produce a greater percent increase in income from a 20% increase in sales?

Reference no: EM133116760

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