Hile Edit Insert Format Help Arial 12 - BI U $A D A B. 1 Problem 3 2 3 Riddle Inc. and Puzzle Inc. have the following operating data: 4 5 Riddle Inc. Puzzle Inc. 6. Sales $2,500,000 $3,800,000 7 Less Variable costs 1,000,000 1,200,000 8 Contribution margin $1,500,000 $2,600,000 9 Less Fixed costs 1,000,000 1,300,000 10 Operating income $500,000 $1,300,000 11 12 Required: 13 A.Compute the operating leverage for Riddle Inc. and Puzzle Inc. Round to one decimal place. 14 Hint: OL = CM/OI 15 Riddle Inc. Puzzle Inc. 16 OL 17 18 B. How much would operating income increase for each company if the sales of each increased by 20%? 19 20 Riddle Inc. Puzzle Inc. 21 Income increase in % 22 Income increase in $ = NI x Income increase % 23 24 C. Why the percentage increase in Net Income in Riddle Inc is higher than that of Puzzle Inc.? 25 26 27 28 29 30 31 32. 33 34 35