Consider each of the following cases: Accounting Case Break-Even Unit Price Unit Variable Cost Fixed Costs Depreciation 1 155,800 $45 $32 2 140,000 ? 50 3 5,502 116 ? $776,000 2,900,000 172,000 ? $850,000 105,000

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Chapter1: Investments: Background And Issues
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2.
At an output level of 15,000 units,
you have calculated that the degree
of operating leverage is 3.2. The
operating cash flow is $19,500 in
this case.
a. Ignoring the effect of taxes, what
are fixed costs?
b. What will the operating cash flow
be if output rises to 17,000 units?
c. What will the operating cash flow
be if output falls to 14,500 units?
Transcribed Image Text:2. At an output level of 15,000 units, you have calculated that the degree of operating leverage is 3.2. The operating cash flow is $19,500 in this case. a. Ignoring the effect of taxes, what are fixed costs? b. What will the operating cash flow be if output rises to 17,000 units? c. What will the operating cash flow be if output falls to 14,500 units?
Consider each of the following cases:
Accounting
Case Break-Even Unit Price Unit Variable Cost Fixed Costs Depreciation
1
155,800
$45
$32
?
2
3
140,000
5,502
50
?
?
116
$776,000
2,900,000
172,000
$ 850,000
105,000
a. Find the depreciation for Case 1.
b. Find the unit price for Case 2.
c. Find the unit variable cost for
Case 3.
Transcribed Image Text:Consider each of the following cases: Accounting Case Break-Even Unit Price Unit Variable Cost Fixed Costs Depreciation 1 155,800 $45 $32 ? 2 3 140,000 5,502 50 ? ? 116 $776,000 2,900,000 172,000 $ 850,000 105,000 a. Find the depreciation for Case 1. b. Find the unit price for Case 2. c. Find the unit variable cost for Case 3.
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