Find what is degree of operating leverage for the project

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Reference no: EM132656407

Problem 1: Webster and Words manage a product with a 3,5 degree of operating leverage. Sales of the product are expected to decline by 15 per cent next year. What is the expected change in the operating cash flow for this product for next year?

A. increase by 23,3 per cent

B. increase by 52,5 per cent

C. decrease by 4,3 per cent

D. decrease by 23,3 per cent
E. decrease by 52,5 per cent

Problem 2: Ann Marie has noted that every time the sales quantity increases by 3 per cent for a particular project, the operating cash flow for the project increases by 5 per cent. What is the degree of operating leverage for this project if the contribution margin is R4?

A. 0,42

B. 1,67

C. 2,33

D. 4,51

E. 5,67

Reference no: EM132656407

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