Fixed costs are assumed to be $500,000 per year. The company estimates the variable cost per unit (v) to be $75 and expects to sell each unit for $425. There are no taxes and the required rate of return is 22% per year. Suppose that sales are currently estimated to be 5000 units per month.

What is the degree of operating leverage?

Using your answer from above, estimate what the new monthly operating cash flow (OCF) will be if sales increase by 100 units: