Compute the operating breakeven point

Reference no: EM131393770

Open Door Manufacturing (ODM) and Closed Door Industries (CWI) have identical operating cost structures. Both firms incur a fixed operating cost equal to $420,000, their variable cost ratio is 80 percent of the unit selling price, and they sell their products for $1,400 each. ODM normally sells 2,000 units per year, whereas CWI normally sells 2,500 units each year.

(a) Compute the operating breakeven point.

(b) Compute the degree of operating leverage (DOL) for each firm at their normal sales levels, and show that ODM is operating closer to the operating breakeven point than CWI.

Reference no: EM131393770

Questions Cloud

Determine the average and maximum number of items : MEM 506: Modeling and Simulation & Operations Research for Engineering Assignment. Run the simulation for a single replication of 2 weeks (10 working days) to determine the average and maximum number of items or boxes in each of three queues (put a..

What is mercury’s financial breakeven point : In addition, Mercury has $60,000 preferred stock that pays a 5 percent dividend. If its marginal tax rate is 40 percent, what is Mercury's financial breakeven point?

What is mercury''s financial breakeven point : Mercury Air's debt consists of $50,000 in accounts payable, $100,000 in 10 percent notes payable, and $240,000 in 8 percent bonds. Mercury has no preferred stock. If its marginal tax rate is 35 percent, what is Mercury's financial breakeven point?

The cycle time for a standard container : The All Seasonings Company uses 3,200 glass jars at one of its jar-filling workstations each eight hours of production. The cycle time for a standard container, which holds 90 jars, averages 45 minutes. If management uses an efficiency factor of 20 p..

Compute the operating breakeven point : Compute the degree of operating leverage (DOL) for each firm at their normal sales levels, and show that ODM is operating closer to the operating breakeven point than CWI.

Prepare a promotional strategy for the product : MKT/421 : Developing the marketing strategies for the NBA2k18 game involves many different steps. Gamers don't have to look hard for new games if they are the newest and hippest games out there. Every new product will have a product life cycle and..

Common value auctions with incomplete information : The winner’s curse may occur in common value auctions with incomplete information.

Identify special populations in your community : Explain the process you used to identify special populations in your community. Explain why the special populations you identified are considered to be vulnerable during disasters.

What is ltw''s operating breakeven point : Lost Time Watch (LTW) Company manufactures watches that are sold for $200 each. Fixed operating costs are $640,000 and variable costs are $120 per watch.

User Account

All Pages