Calculate firm as degree of operating leverage how do i


Two firms, A and B, both produce brushes. The price of brushes is $1.30 each. Firm A has total fixed costs of $450,200 and variable costs of 50 cents per brush. Firm B has total fixed costs of $260,000 and variable costs of 72 cents per brush. The corporate tax rate is 30%. If the economy is strong each firm will sell 1,502,000 brushes. If the economy enters a recession, each firm will sell 979,000 brushes. Calculate Firm A's degree of operating leverage. How do I figure out the degree of operating leverage?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Calculate firm as degree of operating leverage how do i
Reference No:- TGS02693764

Now Priced at $10 (50% Discount)

Recommended (92%)

Rated (4.4/5)