Question: 10 points Item Skipped Print Item 9 Problem 10-17 Operating leverage Modern Artifacts can produce keepsakes that will be sold for $88 each. Nondepreciation fixed

10 points

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Item 9

Problem 10-17 Operating leverage

Modern Artifacts can produce keepsakes that will be sold for $88 each. Nondepreciation fixed costs are $1,400 per year, and variable costs are $60 per unit. The initial investment of $3,200 will be depreciated straight-line over its useful life of five years to a final value of zero, and the discount rate is 11%. a. What is the degree of operating leverage of Modern Artifacts when sales are $7,040?

b. What is the degree of operating leverage when sales are $12,320? (Round your answer to 1 decimal place.)

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