Modern Artifacts can produce keepsakes that will be sold for $110 each. Nondepreciation fixed costs are $1,300 per year, and variable costs are $70 per unit. The initial investment of $3,900 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.

a. What is the degree of operating leverage of Modern Artifacts when sales are $6,050? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Degree of operating leverage:______

b. What is the degree of operating leverage when sales are $11,000? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Degree of operating leverage:______

c. Why is operating leverage different at these two levels of sales?

Degree of operating leverage:______ when profits are ________(higher or Lower)