At an output level of 18,500 units, you have calculated that the degree of operating leverage...

At an output level of 18,500 units, you have calculated that the degree of operating leverage is 2.10. The operating cash flow is $44,000 in this case. Ignore the effect of taxes.

a. What are fixed costs? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

b. What will the operating cash flow be if output rises to 19,500 units? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

c. What will the operating cash flow be if output falls to 17,500 units? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Expert Solution

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The degree of operating leverage can be calculated as:

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