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You estimate that your sheep farm will generate 0.7 million of profits on sales of 4.9...

You estimate that your sheep farm will generate 0.7 million of profits on sales of 4.9 million under normal economic conditions, and that the degree of operating leverage is 4.6. What will profits be if sales turn out to be 5.1 million? Enter your answer in millions, rounded to two decimal places.

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Answer #1

Change in sales = ($5.1-$4.9)/$4.9 = 4.08% Change in profit = 4.08%x4.6 = 18.77% Profit = $0.7*(1+18.77%) = $0.83 Hence, prof

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