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. Compute the break-even point for each company. Explain why the break-even point for Quintex, Inc., is higher.
3. Suppose that both companies experience a 50 percent increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Quintex€™s profits is so much greater than that ofTrimax.

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Trimax, Inc. Qu intex, Inc. $500,000 100,000 $400,000 350,000 Sales Less: Variable costs $500,000 250,000 $250,000 200,000 S 50,000 Contribution margin Less: Fixed costs Operating income S 50