Diane’s Florist has fixed operating costs of $3,825, variable operating costs of $9.50 per flower arrangement, and an average selling price of $24.50 per flower arrangement.
a. What is Diane’s Florist’s operating breakeven point in units (flower arrangements)?
b. Calculate the EBIT for sales of 260, 300, and 340 flower arrangements, respectively.
c. Calculate the percentage changes in units (flower arrangements) sold and EBIT if sales change from the base of 300 flower arrangements to 260 and 340 flower arrangements, respectively.
d. Calculate the degree of operating leverage at 300 flower arrangements.