Determine the degree of operating leverage for each alternative $($manual system and computerized$)$

Blue Spruce Co. is contemplating a major change in its cost structure. Currently, all of its drafting work is performed by skilled drafters. Mike Blue Spruce the owner, is considering replacing the drafters with a computerized drafting system. However, before making the change, Mike would like to know the consequences of the change, since the volume of business varies significantly from year to year. Shown below are CVP income statements for each alternative. Sales Variable costs Contribution margin Fixed costs Net income Manual System 378,000 189,000 $189,000 Computerized System 756,000 567,000 $189,000