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QUESTION
7A (Break-even point, Operating Leverage)
7A (Break-even point, Operating Leverage)
Question 5
The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $65.10. The variable cost per unit is $25.37. Poseidon Swim has average fixed costs per year of $6,521.
Assume that current level of sales is 362 units. What will be the resulting percentage change in EBIT if they expect units sold to changes by 6.5 percent? (You should calculate the degree of operating leverage first)
Round the answer to two decimal places.
