Friendly Companys financial statement for the last month is below.

sales 150,000

less: variable costs 30,000

contribution margin 120,000

less; fixed costs 90,000

operating income 30,000 Required:

1. Calculate the companys Degree of Operating Leverage.
2. Using the Degree of Operating Leverage that you have calculated for part 1, calculate an estimate of a new Net Operating Income, if sales increase by 25%.
3. Given the solutions above, comment on this company if its industry has an average DOL of 6.0.