Firms Y and Z both produce and sell small gasoline engines. The sales price is $200 per engine. Data for both firms at a sales volume of 50 units are as follows:
| Firm Y | Firm Z | |
|---|---|---|
| Sales (50 units) | $ 10,000 | $ 10,000 |
| Variable costs ($50, $25) | 2,500 | 1,250 |
| Total contribution margin | $ 7,500 | $ 8,750 |
| Fixed costs | 4,500 | 5,750 |
| Operating income (πB) | $ 3,000 | $ 3,000 |
Required:
From the existing level of sales, which firm's operating income (πB) is more sensitive to changes in sales volume? Show calculations and round your answers to 2 decimal places.
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Firms Y and Z both produce and sell small gasoline engines. The sales price is $200 per engine. Data for both firms at a sales volume of 50 units are as follows: