Financial accouinting At an output level of 100,000 units, you calculate that thedegree of operating leverage (DOL) is 2.5. Suppose fixedcosts are $250,000.a. What is the operating cash flow at 95,000 units?b. What is the degree of operating leverage?

Step 1: Define Operating LeverageOperating Leverage refers to the proportion of fixed costs in a…

Answered: At an output level of 100,000 units,…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4EB: Assume a company is going to make an investment in a machine of $825,000 and the following are the...

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At an output level of 100,000 units, you calculate that the degree of operating leverage (DOL) is 2.5. Suppose fixed costs are $250,000. a. What is the operating cash flow at 95,000 units? b. What is the degree of operating leverage?