To answer next 4 questions, refer to the following information (these same data will appear on each screen of the related question!):

Cutlass Company sells a single product. The companys controller prepared the following budgeted income statement for the coming year:

Sales Less: Total variable cost Contribution margin Less: Total fixed cost Operating Income

Total $140,000 105,000 35,000 27,000 $ 8,000

1.

What would be additional operating income if Cutlasss sales were $60,000 higher than the budgeted level of sales?

A) $24,000

B) $15,000

C) $3,429

D) $18,000

2.

What is the margin of safety in sales dollars at Cutlasss budgeted level of sales?

A) $108,000

B) $20,000

C) $32,000

D) $36,000

3.

What is the degree of operating leverage at Cutlasss budgeted level of sales (Round to the two decimal places if necessary)?

A) 4.38

B) 0.25

C) 4.00

D) 0.23

4.

What level of sales revenue would have to be generated to earn a target profit of $16,000?

A) $280,000

B) $124,000

C) $172,000

D) $200,000