Consider the previous question with the following new information: Fixed costs are assumed to be $700,000 per year. The company estimates the variable cost per unit (v) to be $125 and expects to sell each unit for $400. There are no taxes and the required rate of return is 17% per year. Suppose that sales are currently estimated to be 7500 units per year. What is the degree of operating leverage?___________ Using your answer from above, ESTIMATE what the new annual operating cash flow (OCF) will be if sales increase by 150 units: $ _________

Click to see additional instructions Consider the previous question with the following new information: Fixed costs are assumed to be $700,000 per year. The company estimates the variable cost per unit (v) to be $125 and expects to sell each unit for $400. There are no taxes and the required rate of return is 17% per year. Suppose that sales are currently estimated to be 7500 units per year. What is the degree of operating leverage? (Round to the CLOSEST 1 decimal place, ie 2.3) Using your answer from above, ESTIMATE what the new annual operating cash flow (OCF) will be if sales increase by 150 units: \$ (Round your answer to the nearest $1000, and do NOT use commas in your response, ie. 1234000) Mark for Review What's This