XYZ company produces and sells business books. The results of the company's operations for the year ended December 31, 20x1, are given below

Sales revenue $400,000

Cost of goods sold (manufacturing costs):

Fixed $100,000

Variable $180,000

Sellling costs:

Fixed $40,000

Variable $10,000

Administrative costs:

Fixed $10,000

Variable $10,000

What is company's operating leverage factor and the impact on XYZ company's net income if

sales increase by 5%, respectively?

A. roughly 4; 20%

B. roughly 4.5; 25%

C. roughly .75; 3.75%

D. roughly .75; -3.75%

E. None of the Above