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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    

Required:

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?

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