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The Harding Company manufactures skates. The companys income statement for 20XX is as follows: I need help answering c-2 . Using your answers to a.
The Harding Company manufactures skates. The companys income statement for 20XX is as follows:
I need help answering
c-2. Using your answers to a. and b. calculate the percentage increase in EBIT and EBT from a 30 percent increase in sales volume. (Round the final answer to the nearest whole number.)
and
e. Break-even point considering the interest expense as a fixed cost.
b. Degree of financial leverage. (Round the final answer to 4 decimal places.) DFL 1.6667 X C-1. Degree of combined leverage. (Do not round the intermediate calculations. Round the final answer to 2 decimal places.) DCL 3.33 X c-2. Using your answers to a. and b. calculate the percentage increase in EBIT and EBT from a 30 percent increase in sales volume. (Round the final answer to the nearest whole number.) EBIT EBT c-3. Does financial or operating leverage have the greater impact? O DFL O DOL d. Break-even point in skates. BE 5000 skates e. Break-even point considering the interest expense as a fixed cost. BE skates Problem 5-10 The Harding Company manufactures skates. The company's income statement for 20XX is as follows: HARDING COMPANY Income Statement Year ended December 31, 20XX Sales (10,000 skates at $50) Less: Variable costs (10,000 skates at $20) $ 500,000 200,000 Book Contribution margin Less: Fixed costs 300,000 150,000 Print Operating profit or (EBIT) Interest expense 150,000 60,000 erences Earnings before taxes (EBT) Income tax expense (40%) 90,000 36,000 Earnings after taxes (EAT) $ 54,000 Given this income statement, compute the following: a. Degree of operating leverage. (Round the final answer to 2 decimal places.) DOL 2 x b. Degree of financial leverage. (Round the final answer to 4 decimal places.) DFL 1.6667 XStep by Step Solution
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