Question: Varner Inc. and King Inc. have the following operating data: Varner King Sales $300,000 $600,000 Variable costs 120,000 360,000 Contribution margin 180,000 240,000 Fixed costs

Varner Inc. and King Inc. have the following operating data: Varner King Sales $300,000 $600,000 Variable costs 120,000 360,000 Contribution margin 180,000 240,000 Fixed costs 120,000 80,000 Income from operations 60,000 160,000 a. Compute the operating leverage for Varner Inc. and King Inc. If required, round to one decimal place. Varner Inc: 3.00 King Inc: 1.50 b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Verner Inc: $ % King Inc: $ %

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