AU Exercise Company is interested in the effects of its cost structure on profitability.

You have learned that for the current period AUs fixed costs are equal to the last four digits of your AU ID # in $ and its operating income is equal to the first three digits of your AU ID # in $.

A. What is AU Exercise Companys operating leverage? _______

Show your work in determining operating leverage.

B. If AU Exercise Companys sales change by 10%, by how much would its operating income change? ______

Show your work in determining the change in operating income.