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What is the degree of operating leverage of modern artifacts

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Modern Artifacts can produce keepsakes that will be sold for $120 each. Nondepreciation fixed costs are $1,800 per year, and variable costs are $70 per unit. The initial investment of $5,400 will be depreciated straight-line over its useful life of 6 years to a final value of zero, and the discount rate is 18%.

What is the degree of operating leverage of Modern Artifacts when sales are $7,440? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

What is the degree of operating leverage when sales are $12,000? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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

Reference no: EM132466853

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