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4 . ( Operating leverage ) The C . M . Quarles Distributing Company manufactures an assortment of cold air intake systems for high -
Operating leverage The C M Quarles Distributing Company manufactures an assortment of cold air intake systems for
highperformance engines. The average selling price for the various units is $ The associated variable cost is $ per unit. Fixed
costs for the firm average $ annually.
a What is the breakeven point in units for the company?
b What is the dollar sales volume the firm must achieve to reach the breakeven point?
c What is the degree of operating leverage for a production and sales level of units for the firm? Calculate to three decimal
places.
d What will be the projected effect on earnings before interest and taxes if the firm's sales level should increase by percent from
the volume noted in part
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