Firm A Revenues and Costs Firm B Revenues and Costs (thousands of dollars) (thousands of dollars) 280 Total Revenues Total Costs 280 Total Costs Total Revenues, 240 240 200- 200 Breakeven Point (30,240) 160 160 Breakeven Point Fixed Costs 120ㅏ (25, 180) 120 80 80 Fixed Costs 40- 40 0 10 20 30 40 50 60 0 10 Units (thousands) 20 30 40 50 60 Units (thousands) a. Given the graphs above, calculate the total fixed costs, variable costs per unit, and sales price for Firm A. Firm B's fixed costs are $120,000, its variable costs per unit are $4, and its sales price is $8 per unit. Round your answers to the nearest cent. Fixed costs: $ Variable costs per unit: $ Sales price per unit: $ b. Which firm has the higher operating leverage at any given level of sales? Firm B c. At what sales level, in units, do both firms earn the same operating profit? Round your answer to the nearest whole number. units
Firm A Revenues and Costs Firm B Revenues and Costs (thousands of dollars) (thousands of dollars) 280 Total Revenues Total Costs 280 Total Costs Total Revenues, 240 240 200- 200 Breakeven Point (30,240) 160 160 Breakeven Point Fixed Costs 120ㅏ (25, 180) 120 80 80 Fixed Costs 40- 40 0 10 20 30 40 50 60 0 10 Units (thousands) 20 30 40 50 60 Units (thousands) a. Given the graphs above, calculate the total fixed costs, variable costs per unit, and sales price for Firm A. Firm B's fixed costs are $120,000, its variable costs per unit are $4, and its sales price is $8 per unit. Round your answers to the nearest cent. Fixed costs: $ Variable costs per unit: $ Sales price per unit: $ b. Which firm has the higher operating leverage at any given level of sales? Firm B c. At what sales level, in units, do both firms earn the same operating profit? Round your answer to the nearest whole number. units
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Firm A
Revenues and Costs
Firm B
Revenues and Costs
(thousands of dollars)
(thousands of dollars)
280 Total Revenues
Total Costs
280
Total Costs
Total Revenues,
240
240
200-
200
Breakeven Point
(30,240)
160
160
Breakeven Point
Fixed Costs
120ㅏ
(25, 180)
120
80
80
Fixed Costs
40-
40
0
10 20 30 40 50 60
0
10
Units (thousands)
20 30 40 50 60
Units (thousands)
a. Given the graphs above, calculate the total fixed costs, variable costs per unit, and sales price for Firm A. Firm B's fixed costs are $120,000, its variable costs per unit are $4, and its sales price is $8 per unit. Round your
answers to the nearest cent.
Fixed costs: $
Variable costs per unit: $
Sales price per unit: $
b. Which firm has the higher operating leverage at any given level of sales?
Firm B
c. At what sales level, in units, do both firms earn the same operating profit? Round your answer to the nearest whole number.
units
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education