Margin of Safety and Operating Leverage

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

Sales (62,750 units @ $60.50)	$3,796,375
Total variable cost	1,328,731
Contribution margin	$ 2,467,644
Total fixed cost	1,328,731
Operating income	$ 1,138,913

Required:

1. Compute the break-even sales dollars. If required, round your answer to nearest whole value. $2,044,202

2. Compute the margin of safety in sales dollars. $1,752,173

3. Compute the degree of operating leverage. Round your answer to two decimal places. 2.17

4. Compute the new operating income if sales are 20% higher than expected. Round intermediate calculations to two decimal places. Round your final answer to the nearest dollar. $