Problem Set: Operating Leverage

1. If a firms Degree of Operating Leverage is 4.0 when its profit is RM1,000,000 and its depreciation is RM500,000, how much (other) fixed costs does it have?
2. Epal Ceria Berhad has a division that makes plastic composite bags for the space industry. The division has fixed costs of $45,000 per month, and it expects to sell 45,000 bags per month. If the variable cost per bag is $6.00, what price must the division charge in order to break even?
3. Kiwi Sdn. Bhd. current sales are RM400,000 at a volume of 10,000 units. Fixed costs are RM120,000 and variable costs are RM30 per unit. What is the company break-even sales volume in units?