Homework Answers
A.
Contribution per unit = Selling price - Variable cost per unit
=25-15
=10
Breakeven point = fixed cost/Contribution per Unit
3000= fixed cost/10
3000*10= fixed cost
Fixed cost = $30000
So fixed cost is $30000 per unit
B.
Units produced =5000
EBIT formula = (contribution per unit * units produced)-fixed cost
=(10*5000)-30000
=$20000
So EBIT will be $20000
C
Contribution of 4000 units = Contribution per unit * units
=(4000*10)
=40000
EBIT at 4000 units = Contribution - fixed cost
=40000-30000
=10000
Degree of operating leverage = Contribution/EBIT
=40000/10000
=4
So DOL is 4
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