1. Margin of Safety and Operating Leverage

   Medina Company produces a single product. The projected income statement for the coming year is as follows:

   Sales (60,000 units @ $17.00)	$1,020,000
   Total variable cost	306,000
   Contribution margin	$ 714,000
   Total fixed cost	690,200
   Operating income	$ 23,800

   Required:

   1. Compute the break-even sales dollars. $

   2. Compute the margin of safety in sales dollars. $

   3. Compute the degree of operating leverage.

   4. Compute the new operating income if sales are 20% higher than expected. $