A project has fixed costs of $2,200 per year, depreciation charges of $500 a year, annual revenue of $11,100, variable costs equal to two-thirds of revenues and the tax rate is 20%.
a. If sales increase by 10%, what will be the increase in pretax profits?
b. What is the degree of operating leverage of this project?
Note: Round your answer to 1 decimal place.
a. Increase in pretax profits
b. Degree of operating leverage
%
times