At an output level of 16,500 units, you have calculated that the degree of operating leverage is 2.80. The operating cash flow is $63,500 in this case. Ignoring the effect of taxes, what are fixed costs? What will the operating cash flow be if output rises to 17,500 units? What will the operating cash flow be if output falls to 15,500 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 16,500 units, you have
calculated that the degree of operating
leverage is 2.80. The operating cash flow is
$63,500 in this case. Ignoring the effect of
taxes, what are fixed costs? What will the
operating cash flow be if output rises to
17,500 units? What will the operating cash
flow be if output falls to 15,500 units?
Transcribed Image Text:At an output level of 16,500 units, you have calculated that the degree of operating leverage is 2.80. The operating cash flow is $63,500 in this case. Ignoring the effect of taxes, what are fixed costs? What will the operating cash flow be if output rises to 17,500 units? What will the operating cash flow be if output falls to 15,500 units?
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