BUSI 620 Week 4 Discussion Board 4

Question #1 – Tetrangle Manufacturing has fixed costs of 2,160 per day.  The firm manufactures bicycle component upgrade kits.  The kits have a short-run average variable cost of 48 and are sold for 66 each.

What is the breakeven level of daily output for the firm?

What is the degree of operating leverage when the daily output is Q = 170?

Question #5 – As an employer wants to reduce the production cost during the economic recession, he/she could choose to (1) lay off some workers without changing wages or (2) keep all workers but cut wages for all. Which method would you choose? Why?

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