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g100num [7]
3 years ago
12

At an output level of 59,000 units, you calculate that the degree of operating leverage is 3.3. The output rises to 64,000 units

. What will the percentage change in operating cash flow be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Percentage change in OCF %
Business
1 answer:
11Alexandr11 [23.1K]3 years ago
5 0

Answer: Percentage change OCF = 27.96%.

Explanation:

Given that,

Output level = 59,000 units

Degree of operating leverage = 3.3

Output rises to 64,000 units,

Degree of Leverage = \frac{Percentage\ change\ in\ Operating\ cash\ Flow}{Percentage\ change\ in\ Quantity}

Percentage change OCF = Degree of Leverage × Percentage change in Quantity

= 3.3 \times \frac{64000-59000}{59000} \times 100

= 27.96%

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