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Burlington Windows is a small company that installs windows. Its cost structure is as follows:

$($Click the icon to view the cost structure.$)$

Burlington is considering changing its sales compensation for next year. Burlington would pay salespeople a $4\%$ commission next year and reduce fixed selling costs by $$64,500.$

Calculate the degree of operating leverage at sales of $6,500$ units under the two options. Comment briefly on the result.

Degree of $=$ operating leverage

Next, complete the following table in order to calculate the degree of operating leverage. $($Round the degree of operating leverage to two decimal places.$)$

Option $1$

Option $2$

$\backslash$table$[[$Selling price,$],[$Variable cost$,],[$Contribution margin per unit,$],[$Contribution margin,$],[$Fixed costs,$],[$Operating income,$],[$Degree of operating leverage,$]]$

Comment briefly on the result. $($Enter the amounts to two decimal places.$)$

These results indicate that, when sales are $6,500$ units, a $1\%$ change in sales and contribution margin will result in a

$\%$ change in operating income for Option $1.$ For Option $2,$ a $1\%$ change in sales and contribution margin will result in a $\%$ change in operating income.

$(1)$ Time Remaining: $01$:$57$:$09$

Data TABLE $-$ selling price from each window installation $$550$

variable cost of each window installation $$500$

annualvfixed costs $$165000$

number of window units sold $6500$

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