EXERCISE 3 Alphonse has the following abbreviated income statement: Sales $2,000,000 Variable costs 750,000 Contribution margin $1,250,000 Fixed costs 550,000 Operating income $ 700,000 Required: 1. What is the contribution margin ratio? 2. What is the break-even point? 3. What sales volume is necessary to earn a 10% return on sales? 4. Compute the degree of operating leverage for Alphonse. If sales increased by 20%, what would be the percentage increase in operating income