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What is the degree of operating leverage of modern artifacts

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Question - Modern Artifacts can produce keepsakes that will be sold for $40 each. Non depreciation fixed costs are $600 per year, and variable costs are $20 per unit. The initial investment of $1,800 will be depreciated straight-line over its useful life of 9 years to a final value of zero, and the discount rate is 13%.

a. What is the degree of operating leverage of Modern Artifacts when sales are $1,800?

b. What is the degree of operating leverage when sales are $2,880?

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

Reference no: EM132075315

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