ACME, Inc. reported the following income statement for 2009:

Sales	$2,500,000
Variable Costs	900,000
Fixed Operating Costs	700,000
EBIT	900,000
Interest Expense	200,000
EBT	700,000
Taxes (30%)	210,000
Net Income	$490,000
Earnings Per Share	$4.90

If ACME's sales next year increase by 20%, ACME's EBIT will increase

A.

20%, showing no operating leverage.

B.

20%, showing no financial leverage.

C.

over 35%, due to operating leverage and financial leverage.

D.

over 35%, due to operating leverage.