Operating leverage analysis-how much profits would increase

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Reference no: EM13824085

Alabama Corporation and California Corporation have the same sales and profits as follows:

Alabama California

Sales $1,000,000 $1,000,000

Variable Costs 600,000 400,000

Contribution Margin 400,000 600,000

Fixed Costs 200,000 400,000

Profit 200,000 200,000

Using an operating leverage analysis, determine how much profits would increase for each company if each experienced a 10% increase in sales.

Reference no: EM13824085

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