The Penguin Company manufactures an assortment of the cold air intake systems. • The average selling price for the vario

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answerhappygod
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The Penguin Company manufactures an assortment of the cold air intake systems. • The average selling price for the vario

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The Penguin Company manufactures an assortment of the cold air intake systems.
• The average selling price for the various units is $150.
• The associated variable cost is $100 per unit.
• The fixed costs for the firm average $40,000 annually.
a. What is the break-even point in units for the company?
b. What is the dollar sales volume that the firm must achieve to reach the break-even point?
c. What is the degree of operating leverage for a sales level of 2,000 units?
d. What is the effect on EBIT, if the firm’s Sales level decreased by 25% from the volume noted in part (c)?
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