Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a proposed project has fixed costs of $43,000 per

A proposed project has fixed costs of $43,000 per year. The operating cash flow at 8,000...

80.2K

Verified Solution

Question

Finance

A proposed project has fixed costs of $43,000 per year. Theoperating cash flow at 8,000 units is $78,000.

Required:

(a) Ignoring the effect of taxes, what is the degree ofoperating leverage?

(b) If units sold rise from 8,000 to 8,500, what will be theincrease in operating cash flow?

(c) What is the new degree of operating leverage?

Answer & Explanation Solved by verified expert
3.8 Ratings (662 Votes)
a The degree of operating cash flow can be computed by using the below formula contribution margin operating income contribution margin operating income Fixed cost 78000 43000 121000 Operating Income 78000 So our degree of operating leverage would be    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

A proposed project has fixed costs of $43,000 per year. Theoperating cash flow at 8,000 units is $78,000.Required:(a) Ignoring the effect of taxes, what is the degree ofoperating leverage?(b) If units sold rise from 8,000 to 8,500, what will be theincrease in operating cash flow?(c) What is the new degree of operating leverage?

Other questions asked by students

Q

need calc 3 assistance!! Find all second partial derivatives of f ?(?, ?, ?) = (?^?)(?^?)(?^?) pls show...

Basic Math
Q

4. Compare and contrast the 3 types of muscle tissues. 5. Describe why it would be...

Biology
Q

1. TRUE OR FALSE: High frequency nerve fibers course along the outer surface of the auditory...

Medical Sciences
Q

Calculate the hydronium ion concentration and the pH when 50.0ml of 0.40M NH3 is mixed with...

Chemistry
Q

give me a page and half about this \" the Nature of  Motivation\".  

Psychology
Q

A 2-Kg mixture of 20% N2 , 30% O2 and 50% CO2 by mass is...

Mechanical Engineering
Q

Discuss the difference between product cost and period cost. Identify three major components of product cost Compare...

Accounting
Q

Why should wearing a lab coat be a standard sa O More pockets to carry...

Biology
Q

12 Given Prove 3 2 Statements 1 41 23 2 and 4 21 22 23...

Geometry
Q

Select the correct answer from each drop down menu Consider the equation below The equation...

Algebra
Q

Cut Arial Copy...

Accounting
Q

Marvel Parts, Inc., manufactures auto accessories. One of the companys products is a set of...

Accounting