Find what degree of operating leverage of modern artifacts

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Modern Artifacts can produce keepsakes that will be sold for $140 each. Nondepreciation fixed costs are $1,500 per year, and variable costs are $80 per unit. The initial investment of $4,500 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.

Question a. What is the degree of operating leverage of Modern Artifacts when sales are $6,160? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Question b. What is the degree of operating leverage when sales are $10,500? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Question c. Why is operating leverage different at these two levels of sales?

Reference no: EM132578439

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