Patterson Company's variable expenses are 55% of sales.At a $400,000 sales level,the degree of operating leverage is 5.If sales increase by $30,000,the new degree of operating leverage will be (rounded):

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CM ratio = 1 - Variable expense ratio
CM ratio = 1 - 0.55 = 0.45
CM ratio = Contribution margin F1F1F1S1F1F1F10 Sales
Contribution margin = CM ratio F1F1F1S1F1F1F10 Sales
= 0.45 F1F1F1S1F1F1F10 $400,000 = $180,000
At sales of $400,000:
Degree of operating leverage = Contribution margin F1F1F1S1F1F1F10 Net operating income
5 = $180,000 F1F1F1S1F1F1F10 Net operating income
Net operating income = $180,000 F1F1F1S1F1F1F10 5 = $36,000
Net operating income = Contribution margin - Fixed expenses
$36,000 = $180,000 - Fixed expenses
Fixed expenses = $180,000 - $36,000 = $144,000
At sales of $430,000:
Contribution margin = CM ratio F1F1F1S1F1F1F10 Sales = 0.45F1F1F1S1F1F1F10 $430,000 = $193,500
Net operating income = Contribution margin - Fixed expenses
= $193,500 - $144,000 = $49,500
Degree of operating leverage = Contribution margin F1F1F1S1F1F1F10 Net operating income
= $193,500 F1F1F1S1F1F1F10 $49,500 = 3.91

Patterson Company's Variable Expenses Are 55% of Sales