This question is killing me.
At an output level of 10,000 units, you have calculated the degree of operating leverage is 3.5. The operating cash flow is $9,000 in this case. Ignoring the effect of taxes, what are fixed costs? What will the Operating Cash flow be if output rises to 11,000 units? If output falls to 9,000 units?
Ok, i got the first part to be $22,500. But I don't know what the hell to do next. I have looked in the book and the part of the equation of OCF=(P-v)xQ-FC. I found the answer in the back of the book to be $5,850 as the OCF but I have no idea how they got that and I need to know b/c we have a test on this stuff tonight. Anyone have any ideas what I need or if I am using the wrong formula.
At an output level of 10,000 units, you have calculated the degree of operating leverage is 3.5. The operating cash flow is $9,000 in this case. Ignoring the effect of taxes, what are fixed costs? What will the Operating Cash flow be if output rises to 11,000 units? If output falls to 9,000 units?
Ok, i got the first part to be $22,500. But I don't know what the hell to do next. I have looked in the book and the part of the equation of OCF=(P-v)xQ-FC. I found the answer in the back of the book to be $5,850 as the OCF but I have no idea how they got that and I need to know b/c we have a test on this stuff tonight. Anyone have any ideas what I need or if I am using the wrong formula.
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