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The Niendorf Corporation produces tea kettles, which it sells for $15 each. Fixed costs are $700,000...

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Finance

The Niendorf Corporation produces tea kettles, which it sellsfor $15 each. Fixed costs are $700,000 for output up to 400,000units. Variable costs amount to $10 per kettle.

a. What is the firm's gain or loss at sales of 125,000 units? of175,000 units?

b. What is the breakeven point? Illustrate your answer with agraph.

c. What is Niendorf's degree of operating leverage at sales of150,000 units? Of 175,000 units?

Answer & Explanation Solved by verified expert
3.8 Ratings (539 Votes)
Selling price pu 15Variable cost pu 10Contribution pu 5Fixed cost 700000Break even point Fixed cost contribution puBreak even point 700000 5 140000 unitsa Firms Gain Loss    See Answer
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The Niendorf Corporation produces tea kettles, which it sellsfor $15 each. Fixed costs are $700,000 for output up to 400,000units. Variable costs amount to $10 per kettle.a. What is the firm's gain or loss at sales of 125,000 units? of175,000 units?b. What is the breakeven point? Illustrate your answer with agraph.c. What is Niendorf's degree of operating leverage at sales of150,000 units? Of 175,000 units?

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