Degree of operating leverage Grey Products has fixed operating costs of $387,000, variable operating costs of $15.51
Posted: Tue Jan 18, 2022 12:57 pm
Degree of operating leverage Grey Products has fixed operating
costs of $387,000, variable operating costs of $15.51
per unit, and a selling price of $62.71 per unit.
a. Calculate the operating breakeven point in units.
b. Calculate the firm's EBIT at 12,000, 13,000, and
14,000 units, respectively.
c. With 13,000 units as a base, what are the percentage
changes in units sold and EBIT as sales move from the base to the
other sales levels used in part (b)?
d. Use the percentages computed in part (c) to determine the
degree of operating leverage (DOL).
e. Use the formula for degree of operating leverage to determine
the DOL at 13,000 units.
costs of $387,000, variable operating costs of $15.51
per unit, and a selling price of $62.71 per unit.
a. Calculate the operating breakeven point in units.
b. Calculate the firm's EBIT at 12,000, 13,000, and
14,000 units, respectively.
c. With 13,000 units as a base, what are the percentage
changes in units sold and EBIT as sales move from the base to the
other sales levels used in part (b)?
d. Use the percentages computed in part (c) to determine the
degree of operating leverage (DOL).
e. Use the formula for degree of operating leverage to determine
the DOL at 13,000 units.