Speedy Mouse Inc. makes a special mouse for computers. Each mouse sells for $25 and annual production and sales are 120,000 units. Costs for each mouse are as follows:

Direct material ........................$ 6.00

Direct labor............................ 3.00

Variable overhead.................... 0.80

Variable selling expenses.......... 2.20

Total variable cost..................$12.00

Total fixed overhead............... $589,550

a. Calculate the unit contribution margin in dollars and the contribution margin ratio for the product.

b. Determine the break-even point in number of mice.

c. Calculate the dollar break-even point using the contribution margin ratio.

d. Determine Speedy Mouse Inc.'s margin of safety in units, in sales dollars, and as a percentage.

e. Compute Speedy Mouse Inc.'s degree of operating leverage. If sales increase by 25 percent, by what percentage would before-tax income increase?