The Quarles Distributing Company manufactures an assortment of cold air intake systems for high-performance engines. The average selling price for the various units is $500 The associated variable cost is $400 per unit. Fixed costs for the firm average $ 180000 annually.
a. What is the? break-even point in units for the company?
b. What is the dollar sales volume the firm must achieve to reach the break-even point?
c. What is the degree of operating leverage for a production and sales level of 3000 units for the firm? (Calculate to three decimal places.) Note that you can compare sales at a 10% higher level ?(3300 units) in detemining the degree of operating leverage.
d. What will be the projected effect on earnings before interest and taxes if the firm's sales level should increase by 50 percent from the volume noted in part ?(c)