Assume that the operating results for last year were as follows:

 

      Sales $1,056,000   Less: Variable expenses  264,000     Contribution margin  792,000   Less: Fixed expenses  594,000     Net operating income $198,000   

a. Compute the degree of operating leverage at the current level of sales. (Round your answer to 1decimal place.) b. The president expects sales to increase by 24% next year. By how much should net operatingincome increase? 5-a. Refer to the original data. Assume that the company sold 46,000 units last year. The sales manager isconvinced that a 15% reduction in the selling price, combined with a $160,000 increase in advertisingexpenditures, would increase annual unit sales by 30%. Prepare two contribution format incomestatements: one showing the results of last year's operations, and one showing what the results ofoperations would be if these changes were made. (Do not round intermediate calculations. Round"Per Unit" answers to 2 decimal places.) No 6. Refer to the original data. Assume again that the company sold 46,000 units last year. The presidentfeels that it would be unwise to change the selling price. Instead, he wants to increase the salescommission by $2 per unit. He thinks that this move, combined with some increase in advertising, woulddouble annual unit sales. By how much could advertising be increased with pro?ts remainingunchanged