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Consider a firm whose financial information is as follows: Number of units produced and sold (per year) 15,000 Sales price per unit 6.00 Fixed operating
Consider a firm whose financial information is as follows:
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Number of units produced and sold (per year) | 15,000 |
Sales price per unit | 6.00 |
Fixed operating costs (per year) | 7,000 |
Fixed financing costs (per year) | 3,000 |
Variable cost per unit | 4.50 |
Earnings before interest and tax | 15,500 |
At 15,000 units produced and sold, calculate:
- degree of operating leverage (DOL)
- degree of financial leverage (DFL
- degree of total leverage (DTL)
- If the number of goods produced and sold decreases by 10%, what is the percentage change of the firms operating profit (EBIT)?
- Calculate the firms breakeven quantity of sales.
Please show me the calculations. Thank you in advance.
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