Feather Friends, Incorporated, distributes a high-quality wooden birdhouse that sells for $20 per unit. Variable expenses are $8 per unit, and fixed expenses total $180,000 per year. Its operating results for last year were as follows:

Sales (20,000 units)	$	400,000
Variable expenses		160,000
Contribution margin		240,000
Fixed expenses		180,000
Operating income	$	60,000

Assume that the operating results for last year were as in the question data.

4-a. Compute the degree of operating leverage based on last years sales. (Answer: 4)

4-b. The president expects sales to increase by 20% next year. Using the degree of operating leverage from last year, what percentage increase in operating income will the company realize this year? Calculate the dollar increase in operating income.

Operating income increases by (Answer: 80%)

Dollar increase in operating income _______________