Business, 14.04.2020 19:06 kamorex

At an output level of 18,500 units, you have calculated that the degree of operating leverage is 2.10. The operating cash flow is $44,000 in this case. Ignore the effect of taxes. What will be the new degree of operating leverage for output levels of 19,500 units and 17,500 units

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Answer from: devontemiles1174

1.99; 2.22

Explanation:

Given that,

At output level of 18,500 units,

Degree of operating leverage = 2.10

Operating cash flow = $44,000

For solving this question we need to follow the following relationship between the degree of operating leverage and earnings before interest and taxes and the contribution margin:

Degree of operating leverage = Contribution margin ÷ operating income

2.10 = Contribution margin ÷ $44,000

2.10 × $44,000 = Contribution margin

$92,400 = Contribution margin

Now, we can get the total fixed costs by simply multiplying the contribution margin with the number of units.

Total fixed costs = Number of units × Contribution margin

= 18,500 × $92,400

= $1,709,400,000

At an output level of 19,500,

Total fixed costs = Number of units × Contribution margin

New Contribution margin = Total fixed costs ÷ Number of units

= $1,709,400,000 ÷ 19,500

= $87,662

Degree of operating leverage:

= Contribution margin ÷ operating income

= $87,662 ÷ $44,000

= 1.99

At an output level of 17,500,

Total fixed costs = Number of units × Contribution margin

New Contribution margin = Total fixed costs ÷ Number of units

= $1,709,400,000 ÷ 17,500

= $97,680

Degree of operating leverage:

= Contribution margin ÷ operating income

= $97,680 ÷ $44,000

= 2.22

Answer from: Quest

i think it is sales-oriented, but i am not sure

Answer from: Quest

the correct answer is - no.

winnipeg, canada, is not further away from the equator than moscow, russia, in fact moscow is the city that is further away from the equator. moscow is on a latitude of 55.7558° north, while winnipeg is on a latitude of 49.8951° north, thus putting moscow by 5.8607° further away from the equator than winnipeg is.

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