FINANCE-Modern Artifacts can produce keepsakes that will be sold for $120 each
Question # 00139774
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Updated on: 11/24/2015 11:21 AM Due on: 12/24/2015
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%.
A. What is the degree of operating leverage of Modern Artifacts when sales are $7,440? (Round answer to 2 decimal places)
B. What is the degree of operating leverage when sales are $12,000? (Round answer to 2 decimal places)
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Solution: FINANCE-Modern Artifacts can produce keepsakes that will be sold for $120 each