The Penguin Company manufactures an assortment of the cold air intake systems.

The average selling price for the various units is $150.

The associated variable cost is $100 per unit.

The fixed costs for the firm average $40,000 annually.

a. What is the break-even point in units for the company?

b. What is the dollar sales volume that the firm must achieve to reach the break-even point?

c. What is the degree of operating leverage for a sales level of 2,000 units?

d. What is the effect on EBIT, if the firms Sales level decreased by 25% from the volume noted in part (c)?