If sales are $420,000, variable costs are 72% of sales, and operating income is $40,000, what is the operating leverage? Right Answer
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If sales are $420,000, variable costs are 72% of sales, and operating income is $40,000, what is the operating leverage? Right Answer
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- a. Given the following graphs, calculate the total fixed costs, variable costs per unit, andsales 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.b. Which firm has the higher operating leverage at any given level of sales? Explain.c. At what sales level, in units, do both firms earn the same operating profit?What is Harley's operating leverage? 3.1, 1.3 or 1.2Consider the following information in your analysis of degree of operating leverage. Unit sales price Unit variable costs Total fixed costs Units sold REQUIRED: Compute for the following: 1. Degree of operating leverage (DOL) 2. The percentage change in operating income P 200 120 550,000 10,000 units 3. How much must be the increase in operating income if sales increase by 40%?