Determine the degree of operating leverage at an output of


The company's fixed costs are 2,500,000 dollars and its debt repayment requirements are 1,000,000. Selling price per barrel of oil is 18 dollars and variable costs per barrel are 10 dollars. (a) Determine the break even output (in dollars) (b) Determine the number of barrels of oil that the company must produce and sell in order to earn a target (operating) profit of 1,500,000 dollars. (c) Determine the degree of operating leverage at an output of 400,000 barrels.

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Microeconomics: Determine the degree of operating leverage at an output of
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