A scooter manufacturer has fixed costs of $278,200 per month. The scooters have a short-run average variable cost of $300 and are sold for $430 each. 1. What is the degree of operating leverage when monthly output is Q=2,500?

A scooter manufacturer has fixed costs of $278,200 per month. The scooters have a short-run average variable cost of $300 and are sold for $430 each. 1. What is the degree of operating leverage when monthly output is Q=2,500?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 7P

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Concept explainers

Cost volume profit (CVP) analysis

CVP analysis is a cost-volume-profit technique of cost accounting that examines the influence of varying levels of expenses and volume on operating profit. Cost Volume Profit analysis determines the relationship between Cost, Sale Volume, sales price, and Profit. CVP analysis is also known as break-even analysis which helps the business organization, banks, and their management to determine and forecast how a change in total sales and cost affects the profit of the organization. CVP analysis helps in financial decision-making for the budget, expense, tax, market investment, and corporate finance and aims at measuring variations in cost and volume.

Question

Please answer fast please arjent asap

A scooter manufacturer has fixed costs of
$278,200 per month. The scooters have a
short-run average variable cost of $300 and
are sold for $430 each.
1. What is the degree of operating leverage
when monthly output is Q=2,500?

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