1. The Johnson firm is considering moving from one level of sales to a higher level of sales and needs to calculate the degree or operating leverage (DOL) of the plan. The company is currently operating at a sales level of 20,000 in revenue. However, the company is planning to expand to 30,000 in sales revenue. Variable costs are 50% of the sales revenue in both scenarios and fixed costs will remain constant at 5,000 for each scenario. Compute the degree of operating leverage (DOL) assuming that the current level of operations is the base scenario.

2. Tony's Beach T-Shirts has fixed annual operating costs of $75,000. Tony retails his T-shirts for $14.99 each and the variable cost per T-shirt is $4.99. Based on this information, how many units would the company need to sell in order to break even?