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Suppose QuickCharge Corporation manufactures phone chargers. They sell their chargers for $20. Their fixed operating costs are $100,000 and their variable operating costs are $10
- Suppose QuickCharge Corporation manufactures phone chargers. They sell their chargers for $20. Their fixed operating costs are $100,000 and their variable operating costs are $10 per charger. Currently they are selling 30,000 chargers per year.
- What is QuickCharges EBIT (earnings before interest and taxes) at current sales of 30,000?
- What is QuickCharges breakeven point?
- Calculate the EBIT if QuickCharges sales increase 50% to 45,000 chargers. What is the percent of change in EBIT under this increase in sales? Also, calculate the EBIT if the company's sales decrease 50% to 15,000 chargers. What is the percent of change in EBIT under this decrease in sales?
- What is QuickCharges degree of operating leverage? Based on your computation, what does its operating leverage say about QuickCharges business risk?
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