Based on the following information on Levered Company, answer these questions:

a) If sales increase by 10%, what should happen to operating income?

b) If operating income increases by 10%, what should happen to EPS?

c) If sales increase by 10%, what should be the effect on EPS?

Sales (100,000 units) $1,400,000

Variable Costs $800,000

Fixed Costs $250,000

Interest paid $125,000

Tax rate 34%

Common stocks issued/outstanding 100,000 shares