Company M has sales of 200,000 units at $2 per unit, variable operating costs of $1.5...

Company M has sales of 200,000 units at $2 per unit, variable operating costs of $1.5 per unit, and fixed operating costs of $4,000.Interst is $8,000 per year. Company N has sales of 200,000 units at $2.5 per unit, variable operating costs of $1 per unit, and fixed operating costs of $62,500. Interest is $17,500 per year. Assume that both companies are in the 30% tax bracket.

Compute the operating breakeven point ( units& dollars) for Company M and N
Compute the degree of operating leverage for Company M and N
Compute the degree of financial leverage for Company M and N
Compute the total leverage for Company M and N
Compare the relative risks of the two companies .

Expert Solution

ekkarill92 answered 2 years ago

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