Operating results for Muffin Top Inc. last month were as follows:

Sales (40,000 units sold)$200,000

Variable costs140,000

Contribution margin60,000

Fixed costs50,000

Net income10,000

a)Calculate the contribution margin ratio (1 mark)

b)Calculate the break even point in dollars(1 mark)

c)Calculate the margin of safety as a percentage(1 mark)

d)Calculate the degree of operation leverage(1 mark)

e)Using the degree of operating leverage, if sales were to increase by 25%, what would the new net income be?(2 marks)

f)The sales manager is convinced that a $1 reduction in selling price will double the number of units sold.Would you recommend the company s the manager suggests?(2 marks)

g)The operations manager believes that by automating certain functions, which will increase fixed costs by $15,000, he can reduce variable costs per unit by $.50.Should the company do it?