Problem 1: Zhao Co. has fixed costs of $469,200. Its single product sells for $193 per unit, and variable costs are $125 per unit. If the company expects sales of $10,000 units, compute its margin of safety in dollars and as a percent of expected sales.
Problem 2: Singh Co. reports a contribution margin of $735,000 and fixed costs of $490,000. (1) Compute the company's degree of operating leverage.(2) If sales increase by 20%, what amount of income will Singh Co. report?