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yulyashka [42]
4 years ago
13

At an output level of 76,000 units, you calculate that the degree of operating leverage is 3.3. The output rises to 81,000 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 21.71 % Will the new level of operating leverage be higher or lower? Higher Lower
Business
1 answer:
Diano4ka-milaya [45]4 years ago
3 0

Answer:

21.71%

Explanation:

We know that

Degree of operating leverage = Change in operating cash flow  ÷ Change in the output level

3.3 = Change in operating cash flow  ÷ 0.065789

So, the percentage change in OCF = 3.3 × 0.065789

                                                           = 21.71%

The Change in the output level is computed below

= (Increased output - normal output level) ÷ normal output level

= (81,000 units - 76,000 units) ÷ 76,000 units

= 5,000 units ÷ 76,000 units

= 0.065789

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