Question: Consider a four-year project with the following information: initial fixed asset investment = $575,000; straight-line depreciation to zero over the four-year life; zero salvage value;

| Consider a four-year project with the following information: initial fixed asset investment = $575,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $41; variable costs = $28; fixed costs = $250,000; quantity sold = 91,000 units; tax rate = 23 percent. |
| a. | What is the degree of operating leverage at the given level of output? |
| b. | What is the degree of operating leverage at the accounting break-even level of output? |
Consider a four-year project with the following information: initial fixed asset investment $575,000; straight-line depreciation to zero over the four-year life; zero salvage value; price $41; variable costs $28; fixed costs $250,000; quantity sold-91,000 units tax rate 23 percent. a. What is the degree of operating leverage at the given level of output? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) b. What is the degree of operating leverage at the accounting break-even level of output? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) This is a numeric cell, so please enter numbers only. a. Degree of oper b. Degree of operating leverage
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
