Magazine Inc Required: A $\quad$ Calculate the Operating Leverage Ratio $\quad$ If Sales Increase by 40 Percent, What Will Be the \begin{array}

Essay

Magazine Inc.had the following income statement for the current year: $$\begin{array} { l r } \text { Sales } & \$ 50,000 \\\text { Variable expenses } & 30,000 \\\text { Contribution margin } & \$ 20,000 \\\text { Fixed expenses } & 8,000 \\\text { Operating income } & \$ 12,000\end{array}$$ Required: A. $\quad$ Calculate the operating leverage ratio.
B. $\quad$ If sales increase by 40 percent, what will be the percentage change in income?
C. $\quad$ If sales decrease by 10 percent how much will income decrease?