Hot Tubs Unlimited Purchases hot tubs from a well-known munufacturere and sells them at retail level. The hot tubs sell, on average, for $2,500 each. The average cost for a hot tub from the manufacturer is $1,500.

The January 2018 monthy costs for the company are listed:

Costs	Cost Formula
Selling:
Advertising	$950 per month
Delivery of hot tubs	$60 per hot tub sold
Sales salaries and commisions	$3,800 per month, plus 4% of sales
Utilites	$650 per month
Depreciation on sales facilities	$5,000 per month
Administrative:
Executive salaries	$13,500 per month
Depreciation on office equipment	$900 per month
Clerical	$2,500 per month, plus $40 per hot tub sold
Insurance	$700 per month

During January the company sells 60 hot tubs.

Required:

1. Calculate the margin of safety and the margin of safety percentage.

2. Calculate the degree of operating leverage.

3. The company would like to earn $38,000 of net operating income. What will be the required sales in units and dollars.