Reference no: EM131300462
Defense Dynamics is considering a project that will have fixed costs of $12,000,000. Its sale price will be $37.50 per unit, and it will have a variable cost per unit of $11.25. Therefore, Defencse Dynamics has to sell 457,143, 300,000, 347,826, or 116)? units to break even on this project. Defense Dynamics Co. marketing sales director doesn't think that the market for the firm is big enough units to make the company's target operating profit of $20,00000. In fact, she beleives that the firm iwll be able to sell only about 200,000 units. However, she also thinks that the demand for Defense Dynamics product is realatively inelastic, so the firm can increase the sales price. Assuming that the firm can sell 200,000 units, what price it set to meet the CFO's EBIT goal of $20,000,000? o $179.81 o $214.06 o $171.25 o $196.94 Several factors affect a firm's operating break-even point. Bsed on teh scenarios decribed in the following table, indicate whether these factors would increase a firm's brek-even quantity, decrease the break-even quantity, or lead to no change. o The firm depreciaites its fixed assets more quickly over a shorter life (increase, decrease, or no change) o Only the sales price (increase, decrease, or no change) o Only the firm's tax rate incre increases (increase, decrease, or no change) When other things are held constant, the higher a firm's operating leverage, the (HIGHER OR LOWER) will be its business risk?
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: Defense Dynamics is considering a project that will have fixed costs of $12,000,000. Its sale price will be $37.50 per unit, and it will have a variable cost per unit of $11.25. When other things are held constant, the higher a firm's operating lever..
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