Question - Company A is a manufacturer with current sales of $3,300,000 and a 60% contribution margin. Its fixed costs equal $1,450,000. Company B is a consulting firm with current service revenues of $3,200,000 and a 30% contribution margin. Its fixed costs equal $460,000.
Compute the degree of operating leverage (DOL) for each company.
A) Contribution Margin Income Statement
B) Degree of Operating Leverage