In June 2018, Tesla CEO Elon Musk announced that the company was laying off 9% of its
Question:
In June 2018, Tesla CEO Elon Musk announced that the company was laying off 9% of its staff. The layoff targeted salaried workers rather than production line workers.
Required
a. What effect would these cuts have on Tesla’s breakeven point? Explain.
b. What effect would these cuts have on Tesla’s margin of safety? Explain.
c. What effect would these cuts have on Tesla’s degree of operating leverage? Explain.
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a Teslas breakeven point would decrease Reducing fixed expenses lowers the breake...View the full answer
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