Am. 121. Current Attempt in ProgressYour answer is partially correct.The single-column CVP income statements shown below are available for Armstrong Company and Contador Company.SalesVariable costsContribution marginFixed costsNet incomeArmstrongContadorSales RevenueVariable CostsArmstrong Co.Contribution MarginFixed Costs$500,000240,000Degree of Operating LeverageNet Income/(Loss)260,000160,000$100,000(a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.)$Contador Co.2.6$4.5(b) Assuming that sales revenue increases by 10% (due to a 10% increase in the number of units sold), prepare a single-column CVPincome statement for each company.$500,00050,000450,000350,000$100,000Armstrong Company$Contador Company

The degree of operating leverage is calculated as the contribution margin divided by the net income.…

Your answer is partially correct. The single-column CVP income statements shown below are available for Armstrong Company and Contador Company. Sales Variable costs Contribution margin Fixed costs Net income Armstrong Armstrong Co. $500,000 240,000 260,000 160,000 $100,000 Contador (a1) Compute the degree of operating leverage for each company. (Round answers to 2 decimal places, e.g. 1.15.) Contador Co. Degree of Operating Leverage 2.6 4.5 $500,000 50,000 450,000 350,000 $100,000