Rocky Mount Metals Company produces the assortment of wood-burning stoves. Average selling price for different units is $500. Associated variable cost is $350 per unit. Fixed costs for firm average $180,000 annually.
a. Determine the break-even point in units for company?
b. Determine the dollar sales volume the firm should achieve to reach break-even point?
c. Describe the degree of operating leverage for production and sales level of 5,000 units for firm? (Compute to three decimal places.)
d. What will be projected effect on earnings before interest and taxes if firm's sales level must increase by 20 percent from volume noted in part c?