Question: A (Break-even point and operating leverage) Allison Radios manufactures a complete ling of radio and communication equipment for law enforcement agencies. The average selling price of its finished product is $180 per unit. The variable cost for these same units is $126. Allison Radios incurs fixed costs of $540,000 per year.

a. What is the break-even point in units for the company?

b. What is the dollar sales volume the firm must achieve in order to reach the break-even point?

c. What would be the firm’s profit or loss at the following units of production sold: 12,000 units? 15, 000 units? 20,000 units?

d. Find the degree of operating leverage for the production and sales levels given in part (c).