Description of this paper

Suppose that the expected variable costs of Otobai...

Description

Solution


Question

Suppose that the expected variable costs of Otobai?s project are ?33 billion a year and that fixed costs are zero. How does this change the degree of operating leverage (DOL)? Now recompute the operating leverage assuming that the entire ?33 billion of costs are fixed. DOL Formula Project Costs Calculation Variable cost 1+(Fixed cost + depreciation)/ operating profit F C Fixed cost 1+(Fixed cost + depreciation)/ operating profit F C

 

Paper#8678 | Written in 18-Jul-2015

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