Danas Ribbon World makes award rosettes. Following is information about the company:

Variable cost per rosette	$	1.20
Sales price per rosette		3.00
Total fixed costs per month		3600.00

Required:

1. Suppose Danas would like to generate a profit of $860. Determine how many rosettes it must sell to achieve this target profit.

Target unit = ?

2. If Danas sells 2,450 rosettes, compute its margin of safety in units, in sales dollars, and as a percentage of sales.

Margin of safety units = ? Margin of safety dollars = ? Percentage of sales = ?%

3. Calculate Danas degree of operating leverage if it sells 2,450 rosettes.

4a. Using the degree of operating leverage, calculate the change in Danas profit if unit sales drop to 2,205 units.

4b. Prepare a new contribution margin income statement to verify change in dana's profit.