The CVP income statements shown below are available for Armstrong Company and Contador Company. Cont

The CVP income statements shown below are available for Armstrong Company and Contador Company. Contador Co. Sales Variable costs Contribution margin Fixed costs Net income Armstrong Co. $500,000 240,000 260,000 160,000 $100,000 $500,000 50,000 450,000 350,000 $100,000 Degree of operating leverage for each company is as follows: Degree of Operating Leverage 2.6 4.5 Armstrong Contador Assuming that sales revenue increases by 10%, the variable costing income statement for each company is as follows: Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Income Armstrong Company Contador Company $550,000 $550,000 264,000 55,000 286,000 495,000 160,000 350,000 $126,000 $145,000 Discuss the differences in operating leverage for the two companies. LINK TO TEXT Discuss how the cost structure of these two companies affects their operating leverage and profitability.