Margin of Safety and Operating Leverage

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

Margin of Safety and Operating Leverage Medina Company produces a single product. The projected income statement for the coming year is as follows: Sales (66,000 units @ $23.00) $1,518,000 Total variable cost 667,920 Contribution margin $ 850,080 Total fixed cost 824,320 Operating income $ 25,760 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