Zincor Manufacturing produces calculators hat sells for $30 each; the fix costs are

$80,000 when 20,000 or fewer calculators are produced; and variable costs are $17.50
per calculator.
(a) What is Zincor‘s Operating Breakeven point?
Operating BEP= FC/CM
= 80,000/ (30- 17.50) 12.50
= 80,000/12.50
= 6,400

(b) What is the firm’s gain or loss at sales of (1) 5,000 Calculators and (2) 8,000
Calculators?
1. 5,000 x (30-17.50) - 80,000 = 17,500
2. 8,000 x (30-17.50) – 80,000 = 20,000
(c) What is Zincor’s degree of operating leverage at sales of (1) 5,000 units and (2)
8,000 units?
1. 5,000 units
Degree of Operating Leverage= Q(P-V)/ Q(P-V) – F
=
Selling Expenses: $6,000
Salaries: $15,000
Rent: $12,500
Income Tax Rate: 30%