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1. Compute the CM ratio and variable expense ratio. Selling price per unit per unit Variable expenses per unit per unit Contribution margin per unit per unit CM ratio Variable expense ratio 2. Compute the break-even sales. Break-even in unit sales Break-even in dollar sales units 3. Compute the margin of safety. Margin of safety in dollars Margin of safety percentage 4. Compute the degree of operating leverage. Sales 32 Variable expenses 33 Contribution margin 34 Fixed expenses 35 Net operating income 36 37 Degree of operating leverage 38