Modern Artifacts can produce keepsakes that will be sold for $90 each. Nondepreciation fixed costs are $1,300 per year, and variable costs are $50 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 12%.

a.What is the degree of operating leverage of Modern Artifacts when sales are $4,950?(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 $9,630?(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 is(Click to select)higherlower

when profits are(Click to select)higherlower

.