Transcribed Image Text
OceanGate sells external hard drives for $280 each. Its totalfixed costs are $50 million, and its variable costs per unit are$210. The corporate tax rate is 30%. If the economy is strong, thefirm will sell 8 million drives, but if there is a recession, itwill sell only half as many.a. What will be the percentage decline in salesif the economy enters a recession?b. What will be the percentage decline inprofits if the economy enters a recession?c. Comparing your answers to (a) and (b), howwould you measure the operating leverage of this firm?
Other questions asked by students
Psychology
Accounting
Accounting