Question
1. The Artful Dodger has decided to sell packages of firecrackers at an upcoming parade. The packages will cost the Dodger 50 cents each. He
1. The Artful Dodger has decided to sell packages of firecrackers at an upcoming parade. The packages will cost the Dodger 50 cents each. He will pay a $500 to the city for a permit to sell the firecrackers. IN addition he must purchase insurance that will cost him $100. The Dodger does not want to sell the packages himself, so he hired 5 NYU students to sell for him. The students will receive $20 each and 10 cents for each package they sell. The dodger will sell the packages for $1 each.
a. How many packages will the Dodger have to sell to break even?
b. How many packages will the Dodger have to sell to have a profit of $500?
c. What is the degree of operating leverage at the level of sales that you calculated in B?
d. Clearly state the meaning of the term operating leverage?
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