28. Green Company's variable expenses are 75% of sales. At a sales level of $400,000, the company's degree of operating leverage is 8. At this sales level, fixed expenses are: A. $87,500 B. $100,000 C. $50,000 D. $75,000 My professor actually marked answer as D. I don't think he is right and have to prove him wrong..

I got A as an answer instead. Here is what I did.

VC= 400,000 x 75% = 300,000 so Sales-VC = 100,000 = Contribution Margin

8 = CM / net income 8 x net income = 100,000 so net income is 12,500

CM - FC = 12500 then. That is 100,000 - 12500 = FC = 87,500

So I don't think it's D. Please help !