Rose Inc. and Tulip Inc. have the following operating data:

a. Compute the operating leverage for Rose Inc. and Tulip Inc.
b. How much would income from operations increase for each company if the sales of each increased by 25%?
c. Why is there a difference in the increase in income from operations for the two companies?Explain.

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Sales Variable costs Contribution margin Fixed costs Income from operations Rose Inc. $920,000 552,000 $368,000 288,000 $ 80,000 Tulip Inc. $1,050,000 630,000 420,000 270,000 150,000