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OceanGate sells external hard drives for $140 each. Its total fixed costs are $10 million, and its variable costs per unit are $110. The corporate
OceanGate sells external hard drives for $140 each. Its total fixed costs are $10 million, and its variable costs per unit are $110. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 million drives, but if there is a recession, it will sell only half as many. |
a. | What is the firms' degree of operating leverage (defined as the ratio of the percent change in EBIT to the percent change in sales)? |
Degree of operating leverage_________ Please, help me to solve it. It is not 1.2. |
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