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Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows: Before Automation After Automation Sales revenue $

Lobster Trap Company is considering automating its manufacturing facility. Company information before and after the proposed automation follows:

Before Automation After Automation
Sales revenue $ 204,000 $ 204,000
Less: Variable cost 92,000 38,000
Contribution margin $ 112,000 $ 166,000
Less: Fixed cost 13,000 63,000
Net operating income $ 99,000 $ 103,000

Required:

1. Calculate Lobster Traps break-even sales dollars before and after automation.

2. Compute Lobster Traps degree of operating leverage before and after automation.

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