If we consider the effect of taxes, then the degree of operating leverage can be written as:

DOL $=1+[$FC $\backslash$times $(1$ TC$)$ TC $\backslash$times D$]/$OCF

Consider a project to supply Detroit with $20,000$ tons of machine screws annually for automobile production. You will need an initial $$3\mathrm{.}1$ million investment in threading equipment to get the project started; the project will last for five years. The accounting department estimates that annual fixed costs will be $$925,000$ and that variable costs should be $$185$ per ton; accounting will depreciate the initial fixed asset investment straight$-$line to zero over the five$-$year project life. It also estimates a salvage value of $$400,000$ after dismantling costs. The marketing department estimates that the automakers will let the contract at a selling price of $$295$ per ton. The engineering department estimates you will need an initial net working capital investment of $$380,000.$ The tax rate is $22$ percent.

a$.$ What is the DOL at the base$-$case level of output? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$

What is the percentage change in OCF if sales increase to $21,000$ tons? $($Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$