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Degree of operating leverage   Grey Products has fixed operating costs of $390,000​, variable operating costs of...

Degree of operating leverage   Grey Products has fixed operating costs of $390,000​, variable operating costs of $16.35 per​ unit, and a selling price of $63.44 per unit.

a. Calculate the operating breakeven point in units.

b. Calculate the​ firm's EBIT at 9,000​, 10,000​, and 11,000 ​units, respectively.

c. With 10,000 units as a​ base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part ​(b​)?

d. Use the percentages computed in part ​(c​) to determine the degree of operating leverage​ (DOL).

e. Use the formula for degree of operating leverage to determine the DOL at

10,000 units.

Solutions

Expert Solution

The firm's break even point is 8282 units

B)

C)

D)

E)

Hence, you will find each solution from part a to e step by step in each image attached herewith.

jeff jeffy answered 1 year ago
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