income statement - calculate Break-even point
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The Douglas Company manufactures ladders. The company's income statement for 2001 is as follows:
Douglas Company Income Statement for Year Ended December 31, 2001.
Sales (10,000 ladders @ $50 each) $500,000
Less: Variable costs (10,000 ladders at $20) 200,000
Fixed costs 150,000
Earnings before interest and taxes (EBIT) 150,000
Interest expense 60,000
Earnings before taxes (EBT) 90,000
Income tax expense (40%) 36,000
Earnings after taxes (EAT) $54,000
Given this income statement, compute the following:
Degree of operating leverage.
Degree of combined leverage.
Break-even point in units (number of ladders).
Please see attached.
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