Calculate the percentage change in ocf-new ocf and new dol

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Reference no: EM132054038

Show all your work (use of formula, etc.) in solving the problems. You still need to show your work even if you use the financial calculator to get the answers. (Please show all work and do not use excel)

At an output level of 2,000 units, you calculate that the degree of operating leverage is 3. Fixed costs are $35,000. (a) If output rises to 2,500 units, calculate the percentage change in OCF, new OCF and new DOL. (b) If output falls to 1,500 units, calculate the percentage change in OCF, new OCF and new DOL. (hint: start by finding the OCF at 2,000 units using DOL equation of 1+ FC/OCF).

Reference no: EM132054038

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