Total Revenues $280000

Total fixed costs $224000

Total variable costs $16000

Total units produced and sold 10000 Bartco produces one type of machine with the above costs and revenues for the year.

1. What is the contribution margin?

2. What is net income?

3. What is the degree of operating leverage? Round to the nearest 100th (two places to the right of the decimal.)

4. If Bartco's sales revenue increases by 20%, what will net income be? Hints: Compute with the degree of operating leverage or there will be rounding differences.

Note that the question wants the NEW net income not the change in net income. If income increases by $1000 you need to add 1000 to the original net income to answer this question.