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An investment banker is analyzing two companies that specialize in the production and sale of...

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Accounting

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An investment banker is analyzing two companies that specialize in the production and sale of candied yams. Blossom Yams uses a labor-intensive approach, and Crane Yams uses a mechanized system. CVP income statements for the two companies are shown below. The investment banker is interested in acquiring one of these companies. However, she is concerned about the impact that each company's cost structure might have on its profitability. (a1) Your answer is correct. Calculate each company's degree of operating leverage. (Round onswers to 2 decimal places, e.3. 1.15.) Determine the effect on each company's net income if sales decrease by 15% and if sales increase by 10%. Assume that sales. fluctuations are attributable to changes in units sold. Do not prepare incomestatements. (Round answers to 2 decimal places. e.g. 10.52. If % change is negative, enter amount with either a negative sign or parenthesis, e.g. -10.52 or (10.52).)

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