Question
Harding Company manufactures skates. The company's income statement for 2010 is as follows: Their Income Statement for the ended December 31, 2010; Their sales of
Harding Company manufactures skates. The company's income statement for 2010 is as follows: Their Income Statement for the ended December 31, 2010;
Their sales of 10,000 skates @$50 each is $500,000
Their variable costs (less) 10,000 skates at $20 is $200,000
With a fixed cost of $150,000
Earnings before interest and taxes is $150,000
and their interest expense is $60,000
and earnings before taxes is 90,000
with an income tax expense(40%) of $36,000
earnings after taxes are $54,000
1) compute the following
a. degree of operating leverage
b. degree of financial leverage
c. degree of combined leverage and
d. braek-even point in units (number of skates)
Thank you
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