Question
The Harding Company manufactures skates. The companys income statement for 20X1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20X1
The Harding Company manufactures skates. The companys income statement for 20X1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20X1 Sales (10,200 skates @ $54 each) $ 550,800 Variable costs (10,200 skates at $22) 224,400 Fixed costs 170,000 Earnings before interest and taxes (EBIT) $ 156,400 Interest expense 61,000 Earnings before taxes (EBT) $ 95,400 Income tax expense (30%) 28,620 Earnings after taxes (EAT) $ 66,780
a. Compute the degree of operating leverage. (Round your answer to 2 decimal places.)
b. Compute the degree of financial leverage. (Round your answer to 2 decimal places.)
c. Compute the degree of combined leverage. (Round your answer to 2 decimal places.)
d. Compute the break-even point in units (number of skates). (Round your answer to the nearest whole number.)
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