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Modern Artifacts can produce keepsakes that will be sold for $50 each. Nondepreciation fixed costs are $700 per year, and variable costs are $40 per unit. The initial investment of $2,100 will be depreciated straight-line over its useful life of 7 years to a final value of zero, and the discount rate is 19%.
Question a. What is the degree of operating leverage of Modern Artifacts when sales are $5,250? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Question b. What is the degree of operating leverage when sales are $8,450? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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