The CVP income statements shown below are available for Armstrong Company and Contador Company. Armstrong Co. Contador Co. Sales $495,000 $495,000 Variable costs 235,000 48,000 Contribution margin 260,000 447,000 Fixed costs 160,000 347,000 Net income $100,000 $100,000 (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e. g. 1.15.) Degree of Operating Leverage Armstrong Contador (b) Assuming that sales revenue increases by 10%, prepare a variable costing income statement for each company.

a. Degree of Operating Leverage = Contribution Margin  / Net Income

Armstrong Company =  260,000 / 100,000 =  2.6

Contador Company = 447,000 / 100,000 = 4.47

b.                                 Armstrong        Contador

Sales revenue               544,500         544,500

Variable costs              258,500         52,800                

Contribution margin      286,000        491,700

Fixed Costs                    160,000         347,000

Net Income                   $126,000       $144,700

Calculation of Sales revenue increase by 10%

495,000 * 1.10 =  544,500

235,000 * 1.10 = 258,500

48,000 * 1.10 = 52,800

answer; the nav calculated at the market close at 4: 00 pm new york time;

answer; swot analysis;