## Answers

1 | ||

Degree of Operating Leverage | ||

Traditional Yarns | 1.56 | =78000/50000 |

Auto-Yarns | 4.84 | =242000/50000 |

2 | ||

% Change in Net income | ||

Sales decrease by 10% | ||

Traditional Yarns | -15.60% | =10%*1.56 |

Auto-Yarns | -48.40% | =10%*4.84 |

Sales increase by 7% | ||

Traditional Yarns | 10.92% | =7%*1.56 |

Auto-Yarns | 33.88% | =7%*4.84 |

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