A project has fixed costs of $1,200 per year, depreciation charges of $400 a year, annual revenue of $7,200, variable costs equal to two-thirds of revenues and the tax rate is 20%.

a. If sales increase by 10%, what will be the increase in pretax profits?

b. What is the degree of operating leverage of this project? (Round your answer to 1 decimal place.)

A project has fixed costs of $1,200 per year, depreciation charges of \$400 a year, annual revenue of $7,200, vanable costs equal to twa-thurds of revenues and the tax rate 520% a. If sales incrense by 10\%, what will be the incrense in pretax profits? b. What is the degree of operating leverage of this prcject? (Round your enswer to 1 decimal place.)