Defense Dynamics is considering a project that will have fixed costs of $12,000,000. Its sale price will be $32.50 per unit, and it will have a variable cost per unit of $10.75.

Therefore, Defencse Dynamics has to sell (314,199, 551,724, 330,770, or 116,012) ?? units to break even on this project.

Defense Dynamics marketing and sales director doesn't think that the firm's market is big enough for the firm to break even. In fact, she beleives that the firm iwll be able to sell only about 200,000 units. However, she also thinks that the demand for Defense Dynamics product is realatively inelastic, so the firm can increase the sales price. Assuming that the firm can sell 200,000 units, what price must it set to break even?

o $77.83

o $70.75

o $67.21

o $84.90

Several factors affect a firm's operating break-even point. Bsed on teh scenarios decribed in the following table, indicate whether these factors would increase a firm's brek-even quantity, decrease the break-even quantity, or lead to no change.

o The firm depreciaites its fixed assets more quickly over a shorter life (increase, decrease, or no change)

o Only the variable cost per unit decreases (increase, decrease, or no change)

o Only the firm's tax rate increases (increase, decrease, or no change)

When other things are held constant, the higher a firm's operating leverage, the (HIGHER OR LOWER) will be its business risk?