Question
Operating Breakeven and Indifference Point Question Two companies have different levels of fixed and variable operating costs. Firm LOL has low operating leverage and firm
Operating Breakeven and Indifference Point Question
Two companies have different levels of fixed and variable operating costs.
Firm LOL has low operating leverage and firm HOL has high operating leverage.
Per unit price and variable cost, and total fixed costs, for both companies are shown in the table:
LOL HOL
Price/unit (P) $120 $120
Variable cost/unit (V). $80 $70
Fixed Costs (FC) $60,000 $80,000
- What is the breakeven point in units sold and dollar sales for LOL? (show your work)
- What is the breakeven point in units sold and dollar sales for HOL? (show your work)
- What is the indifference point in units sold and dollar sales (show your work)?
- Draw and completely label the Sales-EBIT graph!
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Forecasting Principles And Practice
Authors: Rob J Hyndman, George Athanasopoulos
3rd Edition
0987507133, 978-0987507136
