At an Output Level of 50,000 Units,you Calculate That the Degree

question 25

Multiple Choice

At an output level of 50,000 units,you calculate that the degree of operating leverage is 1.8.What will be the percentage change in operating cash flow if the new output level is 54,500 units?

• A)5.00 percent
• B)6.17 percent
• C)16.20 percent
• D)17.43 percent
• E)20.00 percent

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Definitions:

MC < MR

A condition in economic theory where marginal cost is less than marginal revenue, suggesting that increasing production would be profitable.

Profit Maximized

The point at which a firm achieves the highest possible profit margin, where marginal revenue equals marginal cost.

Total Cost

The overall expenditure incurred by a company in the production of goods or services, including fixed and variable costs.

Total Revenue

The total income generated from the sale of goods or services by a company.