Craft Company and Jarmer Company Each Have Sales of $200,000

Essay

Craft Company and Jarmer Company each have sales of $200,000 and costs of $140,000.Craft Company's costs consist of $40,000 fixed and $100,000 variable,while Jarmer Company's costs consist of $100,000 fixed and $40,000 variable.Which company will suffer the greatest decline in profits if sales volume declines by 15%?Prepare contribution margin income statements and compute the degree of operating leverage