Question
A firms product sells for $12 per unit. The unit variable cost is $8. The operating fixed costs total $100,000 per year. The firm pays
A firms product sells for $12 per unit. The unit variable cost is $8. The operating fixed costs total $100,000 per year. The firm pays $20,000 interest and $3,000 preferred dividends each year. The tax rate for this firm is 40%.
1. What is the firms operating breakeven point (rounded to the whole unit)? Select one:
a. 25,000 units
b. 30,000 units
c. 45,000 units
d. 50,000 units
e. None of the above
2. What is the DOL at 50,000 units per year (rounded to the first decimal place)?Select one:
a. 2.0
b. 2.5
c. 4.5
d. 5.0
e. None of the above
3. What is the DFL at 50,000 units per year (rounded to the first decimal place)? Select one:
a. 0.3
b. 1.3
c. 2.3
d. 3.3
e. None of the above
4. What is the DTL at 70,000 units per year (rounded to the first decimal place)?Select one:
a. 1.1
b. 1.5
c. 1.8
d. 2.3
e. None of the above
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