The following information for Boston Co. applies to questions 8 and 9:

Sales $1,000,000

Contribution Margin Ratio 40%

Degree of Operating Leverage 10

8. Use the three figures given above for Boston Co. and the formulas for Contribution Margin Ratio and Degree of Operating Leverage to determine their current net income.

a. $60,000 c. $100,000

b. $40,000 d. $400,000

9. If Bostons sales increase by $50,000, net income for the company will increase by:

a. 100% c. 50%

b. 10% d. 5%