Answered step by step
Verified Expert Solution
Question
1 Approved Answer
need help with part b) After spilling his plate of spaghetti all over his friend's apartment floor, Kevin rented a carpet cleaner to clean it
need help with part b)
After spilling his plate of spaghetti all over his friend's apartment floor, Kevin rented a carpet cleaner to clean it up. In doing so, he realized just how easy it is to clean carpets! He started his own business, diving in head-first by purchasing a carpet cleaner, to make a little money. His friends are keen to use his services to clean their rented apartments before handing back keys to the landlords. Kevin charges $80 to clean the main areas of an apartment. In addition to his equipment costs, he uses a cleaning solution on the carpet, which costs about $2 per unit cleaned. Because of his class load, Kevin currently cleans just 4 apartments per month, but he is thinking about asking his roommate to join him so that he can increase the volume of sales. (a) Your answer is correct. At his current level of activity, Kevin's degree of operating leverage (DOL) is 1.5. How much are his monthly fixed costs? Fixed costs $ per month If Kevin's roommate helps in this business, how much more income can the business make if sales volume increases by 50% ? (Kevin would share his season tickets to the local NHL team with his roommate in exchange for his time.) Increase in income \$Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started