chp 4 21) Margin of Safety and Operating Leverage

Medina Company produces a single product. The projected income statement for the coming year is as follows:

Sales (66,000 units @ $23.00)	$1,518,000
Total variable cost	683,100
Contribution margin	$ 834,900
Total fixed cost	809,600
Operating income	$ 25,300

Required:

1. Compute the break-even sales dollars. $

2. Compute the margin of safety in sales dollars. $

3. Compute the degree of operating leverage.

4. Compute the new operating income if sales are 20% higher than expected. $