XYZ Company sells video games for $45 each. Fixed costs are $900,000 for output up to 200,000 games. Variable costs are $25 per game. 1. What is XYZs net operating income at sales of 75,000 games? 2. What is the operating breakeven point?

Net operating Income: $1,000,000 and Breakeven point: 55,000 games

Net operating income: $1,200,000 and breakeven point: 65,000 games

Net operating income: $1,300,000 and breakeven point:75,000 games

Net operating income: $600,000 and breakeven point: 45,000 games

Widget R US Company manufactures widgets that are sold for $200 each. Fixed operating costs are $640,000 and variable costs are $120 per widget. Calculate:

1. What is Widget R Us operating breakeven point?

2. What is Widget R Us degree of operating leverage at sales of 10,000 widgets?

3. Everything else equal, what would happen to the operating breakeven point if the selling price is raised to $220?

1-Breakeven:8,000 2-Degree of leverage:5,

3-Operating breakeven point decreases.

1-Breakeven:8,000 2-Degree of leverage:5,

3-Operating breakeven point increases.

1-Breakeven:9,000 2-Degree of leverage:7,

3-Operating breakeven point decreases

1-Breakeven:9,000 2-Degree of leverage:7,

3-Operating breakeven point increases