Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Therapeutic Systems sells its products for $17 per unit. It has the following costs: Rent Factory labor Executives under contract Raw material $ 165,000 $

image text in transcribedimage text in transcribedimage text in transcribed

Therapeutic Systems sells its products for $17 per unit. It has the following costs: Rent Factory labor Executives under contract Raw material $ 165,000 $ 6.00 per unit $253,300 $ 1.60 per unit Separate the expenses between fixed and variable costs per unit. Using this information and the sales price per unit of $17, compute the break-even point. (Do not round intermediate calculations.) Break-even point ..... units Boise Timber Co. computes its break-even point strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $6,900,000, but 10 percent of this value is represented by depreciation. Its contribution margin (price minus variable cost) for each unit is $13. How many units does the firm need to sell to reach the cash break-even point? (Round your answer to the nearest whole number.) Cash break-even point units The Sterling Tire Company's income statement for 20X1 is as follows: STERLING TIRE COMPANY Income Statement For the Year Ended December 31, 20x1 Sales (25,000 tires at $70 each) Variable costs (25,000 tires at $35) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense (25%) Earnings after taxes (EAT) $ 1,750,000 875,000 450,000 $ 425,000 52,500 $ 372,500 93,125 $ 279,375 a. Compute the degree of operating leverage. (Round your answer to 2 decimal places.) Degree of operating leverage b. Compute the degree of financial leverage. (Round your answer to 2 decimal places.) Degree of financial leverage c. Compute the degree of combined leverage. (Round your answer to 2 decimal places.) Degree of combined leverage

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Analysis And Use Of Financial Statements

Authors: Gerald I. White, Ashwinpaul C. Sondhi, Haim D. Fried

3rd Edition

0471375942, 978-0471375944

More Books

Students also viewed these Finance questions