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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 (11,200 skates @ $74 each) | $ | 828,800 |
| Variable costs (11,200 skates at $32) | 358,400 | |
| Fixed costs | 270,000 | |
| Earnings before interest and taxes (EBIT) | $ | 200,400 |
| Interest expense | 66,000 | |
| Earnings before taxes (EBT) | $ | 134,400 |
| Income tax expense (40%) | 53,760 | |
| Earnings after taxes (EAT) | $ | 80,640 |
a. Compute the degree of operating leverage. (Round your answer to 2 decimal places.)
Degree of operating leverage_______________
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