The following is Arkadia Corporation's contribution format income statement for last month: Sales.................................. $1,200,000 Variable expenses............. 800,000 Contribution margin.......... . 400,000 Fixed expenses................ . 300,000 Net operating income....... . $100,000 The company has no beginning or ending inventories and produced and sold 20,000 units during the month at a sales price of $60 per unit..

What is the company's degree of operating leverage?

4

8

2

6

None of the above.

How many units would the company have to sell to achieve a desired operating income before taxes of $150,000?

20,000

22,500

15,000

17,500

None of the above