Referring to the Cranberry Company of the previous problem:
a. Calculate the DOL when sales are 20%, 30% and 40% above breakeven.
b. Suppose automated equipment is added which increases fixed costs by $20,000 per month. How much will total variable cost have to decrease to keep the breakeven point the same?
c. Calculate the DOL at the same output levels used in part a.
d. Comment on the differences in DOL with and without the additional equipment.