Operating leverage

(Operating leverage​) The quarles distributing company manufactures an assortment of cold air intake systems for

high-performance engines. The average selling price for the various units is $550. The associated variable cost is $300 per unit. Fixed costs for the firm average $180,000 annually.

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a. What is the break-even point in units for the company?

b. What is the dollar sales volume the firm must achieve to reach the break-even point?

c. What is the degree of operating leverage for a production and sales level of 4000 units for the firm?

d. What will be the projected effect on earnings before interest and taxes if the firm’s sales level should increase by 35 percent from the volume noted in part C

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