At an output of dollar 17,500 units, you have calculated that the degree of oper

Question

At an output of dollar 17,500 units, you have calculated that the degree of operating leverage is 2.20. The operating cash flow is dollar 64,500 in this case. Ignoring the effect of taxes, what are fixed costs? (Do not round intermediate calculations. Round your answer to the nearnest whole number, e.g.2.) Fixed costs dollar What will the operating cash flow be if output to 18,500 units? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g. 32.16.) Operating cash flow dollar What will the operating cash flow be if output falls to 16,500 units? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g. 32.16.) Operating cash flow dollar

Explanation / Answer

DOL = 2.20= Percentage change in OCF/[18500 - 17500)/17500];

% OCF = 12.57%

Operating cash flow will be 64500*(1.1257)=72607

DOL = 2.20= Percentage change in OCF/[16500 - 17500)/17500];

% OCF = -12.57%

Operating cash flow will be 64500*(0.8743)= 56392

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