Ring Co. makes office products. The selling price per package is \(\$ 20\), and variable cost of production is \(\$ 14\). Total fixed cost per year is \(\$ 1,000,000\). The company is currently selling 190,000 packages per year.

a. What is break-even in packages?

b. What is the margin of safety in dollars and in packages?

c. What is the degree of operating leverage?

d. If the company can increase sales in packages by 30 percent, what percentage increase will it experience in income? Prove your answer using the income statement approach.

e. If the company increases advertising by \(\$ 120,000\), sales in packages will increase by 10 percent.
(1) What will be the new break-even point in sales dollars?
(2) The new degree of operating leverage?