Determining Contribution Margin from Degree of Operating Leverage Sonny Company and Cher Corp have degrees of operating leverage of 2.5 and 4.7, respectively. Both companies have net income of...

Sonny Company and Cher Corp have degrees of operating leverage of 2.5 and 4.7, respectively. Both companies have net income of $80,000.

Required:

1. Without performing any calculations, discuss what the degrees of operating leverage tell us about the two companies.

2. Determine each company’s total contribution margin.

3. Compare the companies’ cost structures.