Save a copy of your original model to a new spreadsheet called "alternative contract". Say Jake's employee wanted to negotiate a different work contract: $1,500 per month plus 5% of revenue. Given his original sales volume and mix, how would this contract have changed Jake's operating income? What is the new operating leverage factor? What is the new expected percentage change in operating income if volume increases as expected in the future? Briefly explain your findings to the client

	New	Original	Change
Operating Income	$ 400.00	$ 900.00	$(500.00)
Operating leverage factor	6.00	2.67	3.33
Expected % change in op inc	2.25	1.00	1.25