Consider a four-year project with the following information: Initial fixed asset investment = $575,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $29; variable costs = $19; fixed costs = $235,000; quantity sold = 76,000 units; tax rate = 21 percent. a.What is the degree of operating leverage at the given level of output? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)b.What is the degree of operating leverage at the accounting break-even level of output? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Degree of operating leverage may be helpful in making decisions, particularly when determining how…

Answered: Consider a four-year project with the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider a four-year project with the following information: Initial fixed asset investment = $575,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $29; variable costs = $19; fixed costs = $235,000; quantity sold = 76,000 units; tax rate = 21 percent.

a.	What is the degree of operating leverage at the given level of output? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b.	What is the degree of operating leverage at the accounting break-even level of output? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

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