Sandy

sells authentic Amish quilts on her website. Suppose

Sandy

expects to sell

1,200

quilts during the coming year. Her average sales price per quilt is

$275,

and her average cost per quilt is

$175.

Her fixed expenses total

$60,000.

Compute

Sandy's

operating leverage factor at an expected sales level of

1,200

quilts. If sales volume increases

10%,

by what percentage will her operating income change? Prove your answer by calculating operating income at a sales volume of

1,200

and at a sales volume of

1,320.

Compute her operating leverage factor. (Round your answer to two decimal places.)

First, identify the formula, then compute the operating leverage factor.

Contribution margin

Operating income

=

Operating leverage factor

=