Problem:
At an output level of 17,000 units, you have calculated that the degree of operating leverage is 2.00. The operating cash flow is $33,800 in this case.
Ignoring the effect of taxes;
Required:
Question 1: What are fixed costs?
Question 2: What will the operating cash flow be if output increases to 18,000 units?
Question 3: What will the operating cash flow be if output falls to 16,000 units?
Note: Please show how you came up with the solution.