2)A proposed project has fixed costs of $25,000 and depreciation of $8,000 per year.The variable costs are
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Question:
2)A proposed project has fixed costs of $25,000 and depreciation of $8,000 per year.The variable costs are $7 per unit and sales are $9 per unit.
a)What is the breakeven point in units produced?
Breakeven point =25000/(9-7)=12500
b)What is the breakeven point in dollars of revenue?
Breakeven point in dollars= 12500*9= 112500
c)If the operating profit at 20,000 units is $7,000.What is the degree of operating leverage?
d)If sales increase to 22,000 units, what will operatingprofits be?What will the new operating leverage be?
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