Octavio's Tacos sells 49,000 ready-made lunches each year. You calculate that the degree of operating leverage at this ouput level is 3.6. Octavio believes output will rise this year to 55,000 units. What will be the percentage change in Octavio's operating cash flow? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Percentage change in OCF 12.24 O % Will the new level of operating leverage be higher or lower? Higher Lower O The same ONot enough information
Octavio's Tacos sells 49,000 ready-made lunches each year. You calculate that the degree of operating leverage at this ouput level is 3.6. Octavio believes output will rise this year to 55,000 units. What will be the percentage change in Octavio's operating cash flow? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Percentage change in OCF 12.24 O % Will the new level of operating leverage be higher or lower? Higher Lower O The same ONot enough information
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Octavio's Tacos sells 49,000 ready-made lunches each year. You calculate that the
degree of operating leverage at this ouput level is 3.6. Octavio believes output will rise
this year to 55,000 units.
What will be the percentage change in Octavio's operating cash flow? (Do not round
intermediate calculations. Enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
Percentage change in
OCF
12.24 O %
Will the new level of operating leverage be higher or lower?
Higher
Lower
The same
O Not enough information
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