Question 1 Hunter Valley Wines sells its bottles of wine for $15.90. Variable costs are $10.50, and fixed costs are $216,000 annually. The company is currently selling 50,000 bottles annually. Required: 1. What is the company's margin of safety in units? 2. Calculate the degree of operating leverage. 3. If the company can increase sales by 25%, by what percentage will its income increase? Calculate the new operating income given the 25% sales increase.

Question 1 Hunter Valley Wines sells its bottles of wine for $15.90. Variable costs are $10.50, and fixed costs are $216,000 annually. The company is currently selling 50,000 bottles annually. Required: 1. What is the company's margin of safety in units? 2. Calculate the degree of operating leverage. 3. If the company can increase sales by 25%, by what percentage will its income increase? Calculate the new operating income given the 25% sales increase