1. Determine the break-even point. 2. Compute the margin of safety and explain its significance. 3. Compute the degree of operating leverage at a particular level of sales and explain how it can be used to precict changes in net operating income. Contribution margin per unit CM ratio Variable expense ratio 2. Compute the break-even point Break-even in unit sales Break-even in dollar sales 3. Compute the margin of safety Margin of safety in dollars Margin of safety percentage 4. Compute the degree of operating leverage Sales Variable expenses Contribution margin Fixed expenses Net operating income Degree of operating leverage