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What is the degree of operating leverage of this project

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Reference no: EM133047568

Question - A project has fixed costs of $400 per year, depreciation charges of $400 a year, annual revenue of $3,600, and variable costs equal to two-thirds of revenues.

Required -

a. If sales increase by 17%, what will be the percentage increase in pretax profits?

b. What is the degree of operating leverage of this project?

Reference no: EM133047568

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