Klondike Goldsmith Inc. recorded the following information for one of its products:

Selling price per unit $225

Costs per unit (at normal capacity of 15,000 units):

Direct materials $50

Direct labour $40

Variable overhead $25

Variable sales commission 9% of selling price per unit

Fixed overhead $50

Required:

1. Compute the contribution margin ratio and break-even in sales dollars and in units. (3.5 marks)

2. Compute the margin of safety in dollars. (1 mark)

3. Compute the degree of operating leverage. (1.5 marks)