Problem:
The Poseidon Swim Company produces swim trunks. The average selling price for one of their swim trunks is $38. The variable cost per unit is $25, Poseidon Swim has average fixed costs per year of $35,194.
Required:
Assume that current level of sales is 5,328 units. What will be the resulting percentage change in EBIT if they expect units sold to be increased by 4 percent? (You should first calculate the degree of operating leverage)
Elucidate comprehensively and show all calculation.