A proposed project has fixed costs of $87,000 per year. The operating cash flow at 9,200 units is $109,300. Ignore the effect of taxes. a. What is the degree of operating leverage? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. If units sold rise from 9,200 to 10,000, what will be the new operating cash flow? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the new degree of operating leverage? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. DOL b. New OCF c. New DOL
A proposed project has fixed costs of $87,000 per year. The operating cash flow at 9,200 units is $109,300. Ignore the effect of taxes. a. What is the degree of operating leverage? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. b. If units sold rise from 9,200 to 10,000, what will be the new operating cash flow? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What is the new degree of operating leverage? Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161. a. DOL b. New OCF c. New DOL
Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs
Section: Chapter Questions
Problem 1EP
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Transcribed Image Text:A proposed project has fixed costs of $87,000 per year. The operating cash flow at 9,200 units is $109,300. Ignore the effect of taxes.
a. What is the degree of operating leverage?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.
b. If units sold rise from 9,200 to 10,000, what will be the new operating cash flow?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.
c. What is the new degree of operating leverage?
Note: Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.
a. DOL
b. New OCF
c. New DOL
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