Question: Anna Wright is considering opening a Kwik Oll Change Center. She estimates the following monthly costs: rent $6,000; depreciation on equipment $7,000, and wages $16,400.
Anna Wright is considering opening a Kwik Oll Change Center. She estimates the following monthly costs: rent $6,000; depreciation on equipment $7,000, and wages $16,400. Additionally, each oil change will include five quarts of oil at $1.80 per quart and one oil filter that will cost $3.00. She must also pay The Kwik Corporation a franchise fee of $1.40 per oil change. In addition, she has collected the following data from the company regarding utility costs. The total utility cost is based on the number of monthly oil changes. Month Number of Oil Utility Cost Changes April 4,000 $6,000 6,000 $7,300 June 9,000 $9,600 July 12,000 $12,600 August 19,000 $15,000 Assume the level of sales is 6,500 oil changes per month and the price per oil change is $20. What is the degree of operating leverage? May Numeric Response
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