Compute degree of operating leverage and total leverage

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Reference no: EM132961216

Firm R has sales of 102,000 units at units at $1.97 per unit, variable operating cost of $1.69 unit, and fixed operating costs of $6,020. Interest is $10,050 per year. Firm W has sales of 10200 units at $2.53 per unit, variable operating cost of $o.97 per unit, and fixed operating cost of $62,400. Interest is $17,500 per year. Assume that both firms are in the 40% tax bracket.

Problem 1: Compute degree of operating leverage, financial, and total leverage from firm R.

Problem 2: Compute degree of operating leverage, financial, and total leverage from firm W.

Reference no: EM132961216

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