Taco Rey Restaurant had the following information available related to its operations from last year:

Sales (156,000 units) $580,000
Variable costs 170,000
Contribution margin $410,000
Fixed costs 120,000
Net operating income $290,000


A. What is Taco Rey’s operating leverage? If required, round your answer to two decimal places.

B. If sales increased by 25 percent, what would Taco Rey’s net operating income be?