The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $84.45. The variable cost per unit is $25.05, Poseidon Swim has average fixed costs per year of $8,108. Determine the degree of operating leverage for the level of production and sales 436 swim trunks.
The degree of operating leverage for Poseidon Swim company is :
DOL = Q( P - V)/ (Q(P -V) -F
Where Q = sales units
P = price per unit
V= variable costs
F= fixed costs
Sales unit = 436
= 436 ( $84.45 - $25.05)/[ 436 ($84.45 - $25.05) - $8108]
=$25,898.4/$17790.4
=1.4557
The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim...