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5. Company A has the following estimates per year: fixed cost of $800,000, depreciation $200,000, Revenue $6,000,000 on Sales of 100,000 units and total variable
5. Company A has the following estimates per year: fixed cost of $800,000, depreciation $200,000, Revenue $6,000,000 on Sales of 100,000 units and total variable costs of $4,800,000. What would be the breakeven point for Company A? What would be the DOL (Degree of Operating Leverage)? What would be the impact to Company A if there is a recession, and Sales dropped by 10% ? Please explain. (12 marks)
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