Tetrangle Manufacturing has fixed costs of $2,160 per day

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.
(i) What is the breakeven level of daily output for the firm?
breakeven level is the point at which sales equal costs. The point is located by breakeven analysis, which determines the volume of sales at which fixed and variable costs will be covered. All sales over the breakeven point produce profits; any drop in sales below that point will produce losses.
The contribution margin of each kit is CM = P - VC = 66 - 48 = 18
Then the breakeven output level = fixed cost / contribution margin = 2160 / 18

(ii) What is the degree of operating leverage when daily output is Q = 170?
Degree of operating leverage (DOL) measures the EBIT's percentage change as a result of a change of one percent in the level of output. It helps in measuring the business risk.
To compute it just use the following formula:
DOL = (Sales-Variable Costs) / (Sales-Variable Costs-Fixed Costs)
= Q(P-VC)/ [Q(P-VC)-FC]
= 170(66-48) / [170(66-48)-2160]

2. The market supply and demand functions for a product traded on a perfectly competitive market are given below:
QD = 25 - P
QS = -5 + 4P
Calculate the equilibrium price and quantity.
At the market equilibrium, QD = QS at the same P level.
Then we can write:
25 - P = -5 + 4P
5P = 30
P* = 6
Substitute into either QD or QS:
Q* = 25 - P* = 25 - 6