Consider a four-year project with the following information: initial fixed asset investment = $500,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $35; variable costs = $26; fixed costs = $200,000; quantity sold = 80,000 units; tax rate = 35 percent.
What is the degree of operating leverage at the given level of output?
What is the degree of operating leverage at the accounting break-even level of output?