Sales Variable costs Contribution margin Fixed costs Net income (a) Manual System $1,740,000 Manual System 1,392,000 Computerized System 348,000 108,000 Your answer is correct. $240,000 2 Computerized System $1,740,000 696,000 1,044,000 804,000 Determine the degree of operating leverage for each alternative. (R decimal places, e.g. 1.25.) $240,000 Degree of Operating Leverage 1.45 4.35

(a) Determine the degree of operating leverage for each alternative. decimal places, e.g. 1.25.) Calculate the margin of safety ratio for the original scenarios in Part a. (Round ratios to 2 decimal places, e.g. 0.25.) Using the margin of safety ratio, determine which alternative could sustain the greater decline in sales before operating at a loss