Question
Karulina Bhd. produces rubber shoes that wholesales for RM8.00. Each shoe has variable operating costs of RM5.50. Fixed operating costs are RM20,000 per year. The
Karulina Bhd. produces rubber shoes that wholesales for RM8.00. Each shoe has variable operating costs of RM5.50. Fixed operating costs are RM20,000 per year. The firm pays RM13,000 interest and preferred dividends of RM7,000 per year. At this point, the firm is selling 30,000 shoes per year and is taxed at a rate of 26%.
(i) Calculate Karulina Bhds operating breakeven point. (2 marks)
(ii) On the basis of the firms current sales of 30,000 units per year and its interest and preferred dividend costs, calculate its Earnings Before Interest and Tax (EBIT) and earnings available for common stockholders. (9 marks)
(iii)Calculate the firms degree of operating leverage (DOL). (2 marks)
(iv)Calculate the firms degree of financial leverage (DFL). (2 marks)
(v) Calculate the firms degree of total leverage (DTL). (2 marks)
PLEASE SOLVE ASAP AND IN DETAIL CALCULATION. AND PLEASE DON'T USE EXCEL. THANK YOU SO MUCH:)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started