Cory Bryant runs a courier service in downtown Phoenix. He charges clients \($0.50\) per mile driven. Cory has determined that if he drives 3,000 miles in a month, his total operating cost is \($875\). If he drives 4,000 miles in a month, his total operating cost is \($1,025\). Cory has used the high low method to determine that his monthly cost equation is: Total Monthly Cost = \($425\) + \($0.15\) per Mile Driven.

Required:

1. Determine how many miles Cory needs to drive to break even.

2. Calculate Cory’s degree of operating leverage if he drives 4,200 miles.

3. Suppose Cory took a week off and his sales for the month decreased by 25 percent. Using the degree of operating leverage, calculate the effect this will have on his profit for that month.