Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Modern Artifacts can produce keepsakes that will be sold for $30 each. Nondepreciation fixed costs are $400 per year, and variable costs are $20 per

Modern Artifacts can produce keepsakes that will be sold for $30 each. Nondepreciation fixed costs are $400 per year, and variable costs are $20 per unit. The initial investment of $1,200 will be depreciated straight-line over its useful life of 10 years to a final value of zero, and the discount rate is 8%.

a.What is the degree of operating leverage of Modern Artifacts when sales are $1,620?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.What is the degree of operating leverage when sales are $2,760?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

c.Why is operating leverage different at these two levels of sales?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Financial Management

Authors: James R Mcguigan, R Charles Moyer, William J Kretlow

10th Edition

978-0324289114, 0324289111

More Books

Students also viewed these Finance questions

Question

How do specialist firms earn their profits? LO.1

Answered: 1 week ago

Question

Describe Berkeleys objection to primary qualities.

Answered: 1 week ago

Question

Solve the following 1,4 3 2TT 5x- 1+ (15 x) dx 5X

Answered: 1 week ago