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  3. (part 1 of 2) eli company's operating data for the

(Part 1 of 2) Eli Company's operating data for the most recent month at 45,000...

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Accounting

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(Part 1 of 2) Eli Company's operating data for the most recent month at 45,000 units in sales is given below: The company has a large amount of unused capacity and is studying ways of improving profits. Its business is neither cyelical nor significantly sensitive to a change in the general economic situation. New equipment has come on the market that would allow Eli Company to automate a portion of its operations to increase its scale of economy and to reduce unused capacity. Variable costs would be reduced by $4.25 per unit. However, fixed costs would increase by $189,000 each month. Required: Part 1: For the proposed new operations, compute clearly (i) the degree of operating leverage (DOL), and (ii) the break-even-point in units of sales (BEP). (10 marks)

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