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This information is for a volume of 5,000 units. Sales Revenue $160,000 Variable Costs ( 70,000) Contribution Margin $ 90,000 Fixed Costs (10,000) Net Income

This information is for a volume of 5,000 units.

Sales Revenue $160,000

Variable Costs ( 70,000)

Contribution Margin $ 90,000

Fixed Costs (10,000)

Net Income $ 80,000

Using the information above, answer the following questions and show all your calculations:

c) Would this company benefit if it increased fixed costs by $4,000 and decreased variable costs by 5%? Show your calculations to support your response.

d) Calculate the degree of operating leverage for this company, using the original information.

e) Using the DOL you calculated in part (d), what would be the effect on net income if sales increased by 2%?

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