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What is the degree of operating leverage

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Reference no: EM131809836

Arizona Beverages sells 210,000 bottles of Temple Tingler each year. The product sells for $6.50 per bottle and variable cost per unit is $2.75. Total annual fixed costs are $750,000.

Required

1. What is the degree of operating leverage? What is the break-even point in units?

2. If the company can increase unit sales by 30%, what will be the expected percentage increase in net income? What will be the expected total dollar net income?

3.Use the original data. If the company increases advertising by $22,500, sales in units will increase by 15%. What will be the new break-even point? How much will net income change?

Reference no: EM131809836

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