Velocity Tyres Ltd. manufactures tires for sports cars. Each tire sells for $75. The variable cost per tire is $45, and monthly fixed costs are $500,000. If the company is currently selling 18,000 tires monthly, what is the degree of operating leverage?

Velocity Tyres Ltd. manufactures tires for sports cars. Each tire sells for $75. The variable cost per tire is $45, and monthly fixed costs are $500,000. If the company is currently selling 18,000 tires monthly, what is the degree of operating leverage?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7EB: Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are...

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Question

What is the degree of operating leverage on these financial accounting question?

Velocity Tyres Ltd. manufactures tires for sports cars. Each
tire sells for $75. The variable cost per tire is $45, and
monthly fixed costs are $500,000. If the company is
currently selling 18,000 tires monthly, what is the degree of
operating leverage?

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