Dynamic Designs has fixed costs of $380,000 and produces one graphic arts product with a selling price of $80 and variable costs of $42 per unit. Dynamic is currently selling 18,000 units.
a. What is Dynamic Design's degree of operating leverage (DOL)? (Round to 2 decimal places)
b. If sales revenues are expected to increase by 10%, what will be the expected operating profit?
c. Based on the (b) above, what would be Dynamic's expected net income if its effective tax rate is 30%?

Question

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The Answer of Dynamic Designs has fixed costs of $380,000 and produces one graphic arts product with a selling price of $80 and variable costs of $42 per unit. Dynamic is currently selling 18,000 units.
a. What is Dynamic Design's degree of operating leverage (DOL)? (Round to 2 decimal places)
b. If sales revenues are expected to increase by 10%, what will be the expected operating profit?
c. Based on the (b) above, what would be Dynamic's expected net income if its effective tax rate is 30%?

Dynamic Designs Has Fixed Costs of $380,000 and Produces One