Dana$$s Ribbon World makes award rosettes. Following is information about the company:

Variable cost per rosette $ $2\mathrm{.}00$

Sales price per rosette $6\mathrm{.}00$

Total fixed costs per month $6000\mathrm{.}00$

Required:

Suppose Dana$$s would like to generate a profit of $$1,120.$ Determine how many rosettes it must sell to achieve this target profit.

If Dana$$s sells $2,140$ rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales.

Calculate Dana$$s degree of operating leverage if it sells $2,140$ rosettes.

Using the degree of operating leverage, calculate the percentage change in Dana$$s profit if unit sales drop to $1,819$ units.

Prepare a new contribution margin income statement to verify change in Dana's profit.