Operating leverage at accounting break-even level of output

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Consider a four-year project with the following information: initial fixed asset investment = $510,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $20; variable costs = $10; fixed costs = $150,000; quantity sold = 81,000 units; tax rate = 34 percent.

a) What is the degree of operating leverage at the given level of output? (Do not round intermediate calculations. Round your answer to 4 decimal places, e.g., 32.1616.

Degree of operating leverage:

b) What is the degree of operating leverage at the accounting break-even level of output? (Do not round intermediate calculations. Round your answer to 4 decimal places, e.g., 32.1616.)

Degree of operating leverage:

Reference no: EM131595407

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