XYZ, Inc. produces and sells two products: phones and tablets. XYZ plans to sell 48,000 phones and 12,000 tablets in the coming year. Product price and cost information includes:

Price $1,200 for phones, $910 for tablets.

Unit Variable Cost $225 for phones, $265 for tablets

Direct Fixed Cost $272,100 for phones, $191,680 for tablets

Common fixed selling and administrative expenses total $194,855.

Part 1

Assume total sales in units are 37,605 in the coming year. What is the margin of safety in units? Explain your answer. Hint: base this on the total number of units, not the breakdown between both products.

Part 2

Calculate the degree of operating leverage for each product. Assume there are no common fixed expenses. Explain your answers. Hint: if there are no common fixed expenses, the product margin from Part 1 becomes the operating income.