Determine the breakeven output

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Reference no: EM13175066

Offshore Petroleum's fixed costs are $2,500,000. Selling price per barrel of oil is $18 and variable costs per barrel are $10.

a. Determine the breakeven output (in dollars).

b. Determine the number of barrels of oil that offshore must produce and sell in order to earn a target (operating) profit of $1,500,000.

c. Determine the degree of operating leverage at an output of 400,000 barrels.

d. Assuming that sales of oil are normally distributed with a mean of 362,500 barrels and a standard deviation of 100,000 barrels, determine the probability that Offshore will incur an operating loss

Reference no: EM13175066

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