Step by Step instructions 73 Deci-Bell, Inc. is producing new headphones, but fi

ID: 2647850 • Letter: S

Question

Step by Step instructions

73 Deci-Bell, Inc. is producing new headphones, but first management wants to determine its degree of operating leverage. Deci-Bell Inc. has a base level of sales of 325,784 units. Sales price per unit is $151.98 and variable cost per unit is $ $69.78. Total annual operating fixed costs are $5,396,999. Answer 1.25 74 The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $39. The variable cost per unit is $20, Poseidon Swim has average fixed costs per year of $57,122. Answer 3.27

Explanation / Answer

73)

Sales revenue ( 325784 x 151.98)

49512652

(-) variable cost

-22733208

Contribution

26779445

(-) Fixed operating cost

-5396999

EBIT

21382446

Degree of operating leverage = Contribution / EBIT

= 26779445/ 21382446

=1.25

74)

I am not sure what to calculate in #74. If you want me to show operating leverage, I also need to number of units sold or sales revenue.