Response to the following problem:
Company A:
sales 400,000
variable costs 300000
contribution margin 100000
fixed costs 50000
operating income 50000
Company B:
sales 400000
variable costs 200000
contribution margin 200000
fixed costs 150000
operating income 50000
A. Calculate the degree of operating leverage for each firm.
B. Calculate the margin of safety in dollars for each firm.