Acme Inc. has 200 total employees, 150 of which are nonexcludable employees. Ten employees are highly compensated. Seven of the 10 highly compensated and 100 of the 140 non highly compensated employees are covered under Acme's qualified plan. The average accrued benefits for the highly compensated is 3% and the average accrued benefit for the non highly compensated is 1.5%. Which of the following statements are true regarding coverage.

1. The plan passes thee ratio percentage test

2. The plan passes the average benefits test.

a. 1 only

b. 2 only

c. Both 1 and 2

d. Neither 1 nor 2