Fulp Inc. and Baucom Inc. have the following operating data:

a. Compute the operating leverage for Fulp Inc. and Baucom 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.

Fulp Baucom Sales Variable costs Contribution margin Fixed costs Income from operations $3,000,000 $1,600,000 1,400,000 600,000 $1,600,000 1,200,000 $ 400,000 $1,000,000 600,000 $ 400,000