Use the same data given in problem 13-1 (fixed cost = $20,000 per year, variable cost = $16 per unit, and sales price = $26 per unit ) for Technicians Guild. The company sold 3,000 units in 1996 and expects to sell 3,300 units in 1997. Fixed costs, variable costs per unit, and sales price per unit are assumed to remain same in 1996 and 1997.

a. Calculate the percentage change in operating income and compare it with the percentage change in sales.

b. Comment on the operating leverage effect.

c. Calculate the degree of operating leverage using

(i) data for the years 1996 and 1997

(ii) data for the year 1996 only

d. Explain what the results obtained in

(c) tell us.