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The sales and cost data for two companies in the transportation industry are as follows:...

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Accounting

The sales and cost data for two companies in the transportation industry are as follows:

Pacific Percent Atlantic Percent Sales $ 120,000 100 % $ 120,000 100 % Variable costs 72,000 60 36,000 30 Contribution margin 48,000 40 84,000 70 Fixed costs 36,000 72,000 Operating income (B) $ 12,000 $ 12,000

a. Calculate the degree of operating leverage (DOL) for both Pacific and Atlantic from the data above.

b. Based on your analysis, which company has more risk?

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