2.

Change all of the numbers in the data area of your worksheet so that it looks like this:

Data
4	Unit sales	10,000	units
5	Selling price per unit	$20	per unit
6	Variable expenses per unit	$8	per unit
7	Fixed expenses	$90,000

If your formulas are correct, you should get the correct answers to the following questions.

(a)	What is the break-even in dollar sales?

(b)	What is the margin of safety percentage?

(c)	What is the degree of operating leverage? (Round your answer to 2 decimal places.)

3.	Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.

4.	Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:

Data
4	Unit sales	12,000	units
5	Selling price per unit	$20	per unit
6	Variable expenses per unit	$8	per unit
7	Fixed expenses	$90,000

3.	Using the degree of operating leverage and without changing anything in your worksheet, calculate the percentage change in net operating income if unit sales increase by 20%.

4.	Confirm your calculations in Requirement 3 above by increasing the unit sales in your worksheet by 20% so that the Data area looks like this:

(a)	What is net operating income? (Negative amount should be indicated by a minus sign.)

(b)	By what percentage did the net operating income increase?

00 Verizon 36% 11:16 PM ezto.mheducation.com 3 Data 4 Unit sales 2,000 units Selling price per unit 6 Variable expenses per unit 7 Fixed expenses $20 per unit $8 per unit $90,000 (a) What is net operating income? (Negative amount should be indicated by a minus sign.) Net operating income (b) By what percentage did the net operating income increase? tage increase in net operating