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

	Total	Units	Per Unit
Sales	$ 1,450,000	290,000	$ 5.00
Variable expenses	865,000
Contribution margin	585,000
Fixed expenses	400,000
Net income	185,000

Required:

Round all calculations to 2 decimal places.

a. Calculate the contribution margin ratio.

b. Calculate the breakeven point in units.

c. Calculate the breakeven point in sales dollars.

d. Calculate the margin of safety percentage and briefly explain what this means.

e. Calculate the degree of operating leverage.

f. Many companies in the same industry have a DOL of 5. What does it indicate about this company as compared to the competition?

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