(Answered) Question break-even sales operating leverage change in

Accounting

Question: Break-Even Sales, Operating Leverage, Change in Income Income statements for two different companies in the same industry are as follows:

Required: 1. Compute the degree of operating leverage for each company.

2. Conceptual Connection: Compute the break-even point for each company. Explain why the break-even point for Macduff is higher.

3. Conceptual Connection: Suppose that both companies experience a 30 percent increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Macduff's profits is so much larger than that of Duncan.

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