fixed costs
Question
Modern Artifacts can produce keepsakes that will be sold for $280 each. Nondepreciation fixed costs are $4,200 per
year, and variable costs are $220 per unit. The initial investment of $12,600 will be depreciated straight-line over its useful life of 6 years to a final value of zero, and the discount rate is 13%.
| a. | What is the degree of operating leverage of Modern Artifacts when sales are $30,800? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Degree of operating leverage |
| b. | What is the degree of operating leverage when sales are $57,120? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Degree of operating leverage |
| c. | Why is operating leverage different at these two levels of sales? |
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
