Margin of Safety and Operating Leverage

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

Sales (50,750 units @ $57.50)	$2,918,125
Total variable cost	1,429,881
Contribution margin	$ 1,488,244
Total fixed cost	1,415,582
Operating income	$ 72,662

Required:

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

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

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

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. $