OceanGate sells external hard drives for $200 each. Its total fixed costs are $30 million, and its variable costs per unit are $140.

OceanGate sells external hard drives for $200 each. Its total fixed costs are $30 million, and its variable costs per unit are $140. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? b. What will be the percentage decline in profits if the economy enters a recession? c. Comparing your answers to (a) and (b), What is the firm’s degree of operating leverage?

Expert Solution

jeff jeffy answered 2 years ago

OceanGate sells external hard drives for $280 each. Its total fixed costs are $30 million, and...

OceanGate sells external hard drives for $280 each. Its total fixed costs are $30 million, and its variable costs per unit are $230. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many. a. What is the firm's degree of operating leverage (defined as the ratio of the percent change in EBIT to the percent change in sales) in...

OceanGate sells external hard drives for $152 each. Its total fixed costs are $48 million, and...

OceanGate sells external hard drives for $152 each. Its total fixed costs are $48 million, and its variable costs per unit are $106. The corporate tax rate is 45%. If the economy is strong, the firm will sell 4 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? (Negative value should be indicated by a minus sign. Round your...

OceanGate sells external hard drives for $270 each. Its total fixed costs are $50 million, and...

OceanGate sells external hard drives for $270 each. Its total fixed costs are $50 million, and its variable costs per unit are $220. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? b. What will be the percentage decline in profits if the...

OceanGate sells external hard drives for $400 each. Its total fixed costs are $60 million, and...

OceanGate sells external hard drives for $400 each. Its total fixed costs are $60 million, and its variable costs per unit are $240. The corporate tax rate is 30%. If the economy is strong, the firm will sell 4 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? Percentage decline in sales % b. What will be the percentage...

OceanGate sells external hard drives for $280 each. Its total fixed costs are $50 million, and...

OceanGate sells external hard drives for $280 each. Its total fixed costs are $50 million, and its variable costs per unit are $210. The corporate tax rate is 30%. If the economy is strong, the firm will sell 8 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? b. What will be the percentage decline in profits if the...

OceanGate sells external hard drives for $180 each. Its total fixed costs are $10 million, and...

OceanGate sells external hard drives for $180 each. Its total fixed costs are $10 million, and its variable costs per unit are $110. The corporate tax rate is 30%. If the economy is strong, the firm will sell 8 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? b. What will be the percentage decline in profits if the...

OceanGate sells external hard drives for $288 each. Its total fixed costs are $45 million, and...

OceanGate sells external hard drives for $288 each. Its total fixed costs are $45 million, and its variable costs per unit are $173. The corporate tax rate is 41%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? (Negative value should be indicated by a minus sign. Round your...

OceanGate sells external hard drives for $294 each. Its total fixed costs are $23 million, and...

OceanGate sells external hard drives for $294 each. Its total fixed costs are $23 million, and its variable costs per unit are $191. The corporate tax rate is 32%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many. a. What will be the percentage decline in sales if the economy enters a recession? (Negative value should be indicated by a minus sign. Round your...

A company sells its product for $140 per unit and their fixed costs are $21,760 per...

A company sells its product for $140 per unit and their fixed costs are $21,760 per month. Suppose the company's break-even point is 340 units, then their variable cost per unit is

Sells price per unit=$200 variable manufacturing costs per unit= $50 variable S&A costs per unit= $10...

Sells price per unit=$200 variable manufacturing costs per unit= $50 variable S&A costs per unit= $10 Fixed MOH= $50,000 Fixed S&A costs=$10,000 Units produced=5000 Units sold= 4000 Produce a full absorption income statement, what is the operating income produce a variable costing income statement, what is the operating income if units produced exceeds untis sold, does full absorption accounting or varible cost account result in a higher operating income

Question