At an output level of 12,200 units, you have calculated that the degree of operating leverage is 3.20. The operating cash flow is $67,100 in this case. Ignore the effect of taxes. What will be the new degree of operating leverage for output levels of 13,200 units and 11,200 units

For 13,200, the Operating Leverage is 3.46.

For 11,200, the Operating Leverage is 2.94.

Explanation:

The first step is to calculate the Contribution Margin per unit:

Operating Leverage = (# of units * Contribution margin per unit) / Net Operating income

Here,

Number of Units are 12,200 Units

Net Operating income $67,100

Operating Leverage is 3.2

By putting values, we have:

3.2 = (12,200 Units * Contribution margin per unit) / $67,100

(3.2 * $67,100) / 12,200 Units = Contribution margin per unit

Contribution margin per unit = $17.6 per unit

For 13,200 units:

By putting value of units and keeping other variables constant, we have:

Operating Leverage = (13,200 units x $17.60 per unit) / $67,100

Operating Leverage = 3.46

For 11,200 units:

By putting value of units and keeping other variables constant, we have:

Operating Leverage = (11,200 units * $17.60 per unit) / $67,100

Operating Leverage = 2.94

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whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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