Question: A project has fixed costs of $1,000 per yer, depreciation charges of $500 a year, sales of 5000 units a year, selling price is $1.20 per unit and variable cost is $0.80 per unit.
Required:
Q1. What is the break-even sale?
Q2. What is degree of operating leverage?
Q3. If the sales increase by 10%, what will be the change in operating profit (EBIT)?
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