Exercise 22-21 Operating leverage computed and applied L.O. A2

Company A is a manufacturer with current sales of $3,500,000 and a 50% contribution margin. Its fixed costs equal $1,200,000. Company B is a consulting firm with current service revenues of $3,500,000 and a 20% contribution margin. Its fixed costs equal $150,000.

1.

Compute the degree of operating leverage (DOL) for each company. (Round your answers to 1 decimal place.)

Company A%u2019s DOL?

Company B%u2019s DOL?