You estimate that your cattle farm will generate $0.30 million of profit on sales of $6 million under normal economic conditions and that the degree of operating leverage is 4. A. What will profits be if sales turn out to be $4.5 million? B. What if they are $7.5 million?

You estimate that your cattle farm will generate $0.30 million of profit on sales of $6 million under normal economic conditions and that the degree of operating leverage is 4. A. What will profits be if sales turn out to be $4.5 million? B. What if they are $7.5 million?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter10: Forecasting Financial Statement

Section: Chapter Questions

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Question

General accounting

You estimate that your cattle farm will
generate $0.30 million of profit on sales
of $6 million under normal economic
conditions and that the degree of
operating leverage is 4.
A. What will profits be if sales turn out to
be $4.5 million?
B. What if they are $7.5 million?

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