Bearcat Paws produces two sizes of Christmas Ornaments. The selling prices and variable costs are as follows:

	Small	Large
Selling price per ornament	$8.00	$20.00
Variable cost per ornament	4.00	8.00

The company sells three small Christmas ornaments for every large Christmas ornament.

The contribution margin income statement for the year ended December 31, 2015 follows:

Sales revenue	$225,000
Variable costs	90,000
Contribution margin	135,000
Fixed costs	75,000
Profit	$60,000

Questions

1. Calculate the weighted average contribution margin per unit for Bearcat Paws.

2. Determine the break-even point in units.

3. Compute the degree of operating leverage.

4. Based on your calculation in requirement 3, estimate the profit if sales increase by 10%.