Modern Artifacts
Question
Modern Artifacts can produce keepsakes that will be sold for $40 each. Nondepreciation fixed costs are $600 per
year, and variable costs are $20 per unit. The initial investment of $1,800 will be depreciated straight-line over its useful life of 9 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 $1,800? (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 $2,880? (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? |
| Degree of operating leverage is (Click to select)higherlower when profits are (Click to select)higherlower. |
Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"
