The following CVP income statements are available for Baxter Company and Donaldson Company.

Instructions:

a. Compute the degree of operating leverage for each company.

b. Prepare a CVP income statement for each company, assuming that sales revenue Decreases by 20%

Transcribed Image Text:

Baxter Company Donaldson company Sales revenue Variable costs $ 1,050,000 $ 1,050,000 525,000 210,000 840,000 Contribution margin Fixed costs 525,000 275,000 $ 250,000 590,000 $ 250,000 Net Income