Problem 11-12 Calculating Operating Leverage [LO4] At an output level of 59,000

Question

Problem 11-12 Calculating Operating Leverage [LO4] At an output level of 59,000 units, you calculate that the degree of operating leverage is 3.30. Suppose fixed costs are $160,000. What is the operating cash flow at 53,000 units? (Do not round intermediate calculations and round your final answer to the nearest whole number, e.g., 32) Operating cash flow What is the new degree of operating leverage? (Do not round intermediate calculations and round your final answer to 3 decimal places, e.g., 32.161.) Degree of operating leverage

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Fixed costs         160,000.00 DOL = Contribution/EBIT 3.30 = contribution/(Contribution -160000) 3.30 Cont - 528000 = Cont 528000 = 2.3 Cont Contribution at 59000 Units         229,565.22 Contribution at 53000 Units = 229,565.22/59000*53000         206,219.60 Operating Cash flow or EBIT = 206219.60 - 160000                  46,220 New DOL = 206219.60/46220                    4.462

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