Fixed operating costs
Lost Time Watch (LTW) Company manufactures watches that are sold for $200 each. Fixed operating costs are $640,000 and variable costs are $120 per watch. (a) What is LTW’s operating breakeven point? (b) What is LTW’s degree of operating leverage (DOL) at sales of 10,000 units? (c) Everything else equal, what would happen to the operating breakeven point if the selling price is raised to $220?
Fixed operating costs