Scooby Snacks Ltd. produces a single product. Last years income statement is as follows:

	Total	Units	Per Unit
Sales	$ 1,750,000	218,750	$ 8.00
Variable expenses	950,000
Contribution margin	800,000
Fixed expenses	510,000
Net income	290,000

Required: (9 marks total)

Round all calculations to 2 decimal places.

a. Calculate the contribution margin ratio. (1 mark)

b. Calculate the breakeven point in units. (1 mark)

c. Calculate the breakeven point in sales dollars. (1 marks)

d. Calculate the margin of safety percentage and briefly explain what this means. (2 marks)

e. Calculate the degree of operating leverage. (1 mark)

f. Many companies in the same industry have a DOL of 4. What does it indicate about this company as compared to the competition? (1 mark)

g. If sales are expected to increase by 5%, calculate the expected net income. Use your answer in part (f) to determine this answer. (2 marks)