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TastyKreme and Krispy Kake are both producers of baked goods, but each has...

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Accounting

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TastyKreme and Krispy Kake are both producers of baked goods, but each has followed a different production strategy. The differences in their strategies resulted in differences in their cost structure, as shown in the following table: Estimated sales in units Unit price Variable cost per unit Total fixed costs TastyKreme Krispy Kake 20,000 15,000 6.00 8.00 3.00 3.00 $ 30,000 $ 45,000 Required: 1. Compute the operating income and degree of operating leverage (DOL) for each company. (Round "Degree of operating leverage" to 1 decimal place.) 2. Assuming sales volume each company will decline by 10% and that their cost structures will not change, compute the percentage and dollar amount of the change in operating income for each company. (Negative values should be indicated by a minus sign.) Tasty Kreme Krispy Kake 1. Operating income Degree of operating leverage 2. Percentage change in operating income Dollar change in operating income % %

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