PneumoTech, Inc. is studying the addition of a new valve to its product line. The valve would be used by manufacturers of pneumatic equipment. The company anticipates starting with a relatively low sales volume and then boosting demand over the next several years. A new salesperson must be hired because PneumoTechs current sales force is working at capacity. Two compensation plans are under consideration:

Plan A: An annual salary of $33,000 plus a 10% commission based on gross dollar sales.

Plan B: An annual salary of $99,000 and no commission.

PneumoTech, Inc. will purchase the valve for $75 and sell it for $120. Anticipated demand during the first year is 6,000 units. (In the following requirements, ignore income taxes.)

Q:Compute the operating leverage factor of both plans at the anticipated demand of 6,000 units