OceanGate sells external hard drives for $180 each. Its total fixed costs are $10 million, and...

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OceanGate sells external hard drives for $180 each. Its totalfixed costs are $10 million, and its variable costs per unit are$110. The corporate tax rate is 30%. If the economy is strong, thefirm will sell 8 million drives, but if there is a recession, itwill sell only half as many.
a. What will be the percentage decline in salesif the economy enters a recession?
b. What will be the percentage decline inprofits if the economy enters a recession?
c. Comparing your answers to (a) and (b), howwould you measure the operating leverage of this firm?

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OceanGate sells external hard drives for $180 each. Its totalfixed costs are $10 million, and its variable costs per unit are$110. The corporate tax rate is 30%. If the economy is strong, thefirm will sell 8 million drives, but if there is a recession, itwill sell only half as many.a. What will be the percentage decline in salesif the economy enters a recession?b. What will be the percentage decline inprofits if the economy enters a recession?c. Comparing your answers to (a) and (b), howwould you measure the operating leverage of this firm?