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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 $80 each. Nondepreciation fixed costs are $1,000 per year, and variable costs are $60 per unit. The initial investment of $3,000 will be depreciated straight-line over its useful life of 5 years to a final value of zero, and the discount rate is 10%.

a. What is the degree of operating leverage of Modern Artifacts when sales are $7,000?

b. What is the degree of operating leverage when sales are $12,000?

Reference no: EM132779864

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