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Compute the degree of operating leverage for each company

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Reference no: EM133117777

Question - Information for two companies follows:

 

Skittles Company

Starburst Company

Sales

$7,825,600

$3,828,000

Contribution margin

6,375,600

1,428,000

Fixed costs

4,989,600

918,000

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 10% increase in sales?

Reference no: EM133117777

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