Break even point, degree of operating leverage,
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Use the following information to answer the next four questions:
Sales (30,000 units)
Variable Costs $150,000
100,800
Contribution margin
Fixed manufacturing costs $49,200
24,000
Operating Income
Interest $25,200
18,000
Earnings before taxes
Taxes (30%) $7,200
2160
Net Income $5,040
Shares Outstanding 600
Using the financial information above, this firm's break-even point is
4,800 units
14,634 units
7,142 units
18,000 units
The Degree of Operating Leverage (DOL) is
1.58x
1.95x
3.50x
1.40x
The Degree of Financial Leverage (DFL) is
3.50x
1.40x
1.95x
1.58x
The Degree of Combined Leverage (D.C.L.) is
3.08x
5.45x
2.73x
6.83x
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Solution Summary
This solution is comprised of a detailed explanation to calculate break even point, degree of operating leverage, degree of financial leverage, and degree of combined leverage.
Solution Preview
Use the following information to answer the next four questions:
Sales (30,000 units) $150,000
Variable Costs 100,800
Contribution margin $49,200
Fixed manufacturing costs 24,000
Operating Income $25,200
Interest 18,000
Earnings before taxes $7,200
Taxes (30%) 2,160
Net Income $5,040 ...
Purchase this Solution
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