Lara Corporation has fixed operating costs of US$72,000, variable operating costs of US$6.75 per unit, and a

Question:

Lara has fixed operating costs of US$72,000, variable operating costs of US$6.75 per unit, and a selling price of US$9.75 per unit.
a. Calculate the operating breakeven point in units.
b. Compute the degree of operating leverage (DOL) using the following unit sales levels as a base: 25,000, 30,000, and 40,000. Use the formula given in the chapter.
c. Graph the DOL figures that you computed in part b (on the y axis) against base sales levels (on the x axis).
d. Compute the degree of operating leverage at 24,000 units; add this point to your graph.
e. What principle do your graph and figures illustrate?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...