BASIC INFORMATION: A three-year project will cost $60,000 to construct. This will be depreciated straight-line to zero over the three-year life. The price per unit sold is $20 and the variable cost per unit sold is $10. Fixed costs are $30,000 per year.

Using the BASIC INFORMATION, compute the DOL if the quantity sold is 7,000. (Ignore taxes.)
A) 0.75
B) 1.36
C) 1.49
D) 1.75
E) 2.36

Question

BASIC INFORMATION: A three-year project will cost $60,000 to construct. This will be depreciated straight-line to zero over the three-year life. The price per unit sold is $20 and the variable cost per unit sold is $10. Fixed costs are $30,000 per year.

Using the BASIC INFORMATION, compute the DOL if the quantity sold is 7,000. (Ignore taxes.)

Using the BASIC INFORMATION, compute the DOL if the quantity sold is 7,000. (Ignore taxes.)
A) 0.75
B) 1.36
C) 1.49
D) 1.75
E) 2.36

Quizplus · Accepted Answer

The Answer of BASIC INFORMATION: A three-year project will cost $60,000 to construct. This will be depreciated straight-line to zero over the three-year life. The price per unit sold is $20 and the variable cost per unit sold is $10. Fixed costs are $30,000 per year.

Using the BASIC INFORMATION, compute the DOL if the quantity sold is 7,000. (Ignore taxes.)
A) 0.75
B) 1.36
C) 1.49
D) 1.75
E) 2.36

BASIC INFORMATION: a Three-Year Project Will Cost $60,000 to Construct