Question: In solving the exercises below, round all the dollar figures to TWO DECIMAL POINTS . 12-5 The Penguin C ompany manufactures an assortment of the

In solving the exercises below, round all the dollar figures to TWO DECIMAL POINTS.

12-5

The Penguin Company manufactures an assortment of the cold air intake systems.
The average selling price for the various units is $150.
The associated variable cost is $100 per unit.
The fixed costs for the firm average $40,000 annually.
a. What is the break-even point in units for the company?
b. What is the dollar sales volume that the firm must achieve to reach the break-even point?
c. What is the degree of operating leverage for a sales level of 2,000 units?
d. What is the effect on EBIT, if the firms sales level decreased by 25% from the volume noted in part (c)?


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