Q1.

William Kelvie Inc., incurs fixed costs of $3 million for manufacturing a microwave that is sold for $700 per unit and carries variable unit costs of $200: a) What is the break-even point in units and dollar amount? b) Show if Kelvie gains or losses in the following quantities when produced and sold: 5,000 units, 7,000 units, and 8,000 units. c) What is the Degree of Operating leverage at each of the three production levels? (6 marks)