XYZ Company produces and sells a single product. The companys income statement for the most recent month is given below:

Sales (6,000 units at $40 per unit)240,000

Less manufacturing costs:

Direct Materials 48,000

Direct Labor 60,000

Variable factory Overhead 12,000

Fixed factory Overhead 30,000 150,000

Gross margin 90,000

Less selling and other expenses:

Variable selling and other expenses 24,000

Fixed selling and other expenses42,000 66,000

Net Operating Income 24,000There are no beginning or ending inventories.

Required: (every solution needs to be done with formulas only, no numbers in formulas)

a. Compute the companys monthly break-even point in units of product.

b. Compute the margin of safety of the company as a dollar value and as a percentage.

c. Compute the operating leverage of this company.

d. What would the company's monthly net operating income be if sales increased by 25% and there is no change in total fixed expenses?

e. Refer to base example: What dollar sales must the company achieve in order to earn a net operating income of $50,000 per month?