2. A review of the degree of operating leverage (DOL) It is December 31. Last year, Western Gas & Electric Company (WGEC) had sales of $8,000,000, and it forecasts that next year's sales will be $8,560,000. Its fixed costs have been and are expected to continue to be $600,000, and its variable cost ratio is 55.00% WGEC's capital structure consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of common equity. The company's profits are taxed at a marginal rate of 35%. Given this data, complete the following sentences: The percentage change in the company's sales is The percentage change in EBIT is The degree of operating leverage (DOL) at $8,560,000 is Assume that at a given sales level, a firm's DOL IS 2.5. This means that a 1% change in the firm's sales will result in a corresponding 2.5% change in the firm's EBIT. True or False: This statement accurately describes a firm's DOL. O False True