Question: Degree of operating leverage Grey Products has fixed operating costs of $380,000, variable operating costs of $16 per unit, and a selling price of $63.50 per unit.
Q1. Calculate the operating breakeven point in units.
Q2. Calculate the firm's EBIT at 9,000, 10,000, and 11,000 units, respectively.
Q3. With 10,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part b?
Q4. Use the percentages computed in part c to determine the degree of operating leverage (DOL).
Q5. Use the formula for degree of operating leverage to determine the DOL at 10,000 units.