Question
OMS Inc. sells a product for $50 per unit. Variable expenses are $32 per unit, and fixed expenses are totaled $108,000 per month. The company
OMS Inc. sells a product for $50 per unit. Variable expenses are $32 per unit, and fixed expenses are totaled $108,000 per month. The company is currently selling 8,000 units per month
(a) How many units would have to be sold if the selling price is reduced by 10% to yield a minimum net operating income of $35,000 per month.
(b) Refer to the original data, if the fixed expenses remain unchanged, selling price is reduced by 10% and total monthly unit sales are increased by 25%, the net operating income will be
(c) Refer to the answer to part (b), the degree of operating leverage will be
(d) Assume fixed costs remain unchanged, what will be the impact on break-even point if variable expenses per unit increase as a percentage of selling price and why?
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