Task:
Sales (30,000 units) $150,000
Variable costs 100,800
Contributions margin $ 49,200
Fixed manufacturing costs 24,000
Operating Income $ 25,200
Interest 18,000
Earnings Before Taxes $ 7,200
Taxes (30%) 2,160
Net Income $ 5,040
Shares Outstanding 600
Q1. This firm's break-even point is:
A) 4,800 units
B) 14,634 units
C) 7,142 units
D) 18,000 units
Q2. The Degree of Operating Leverage (DOL) is
A) 1.58x
B) 1.95x
C) 3.50x
D) 1.40x
Q3. The Degree of Financial Leverage (DFL) is
A) 3.50x
B) 1.40x
C) 1.95x
D) 1.58x
Q4. The Degree of Combined Leverage (D.C.L.) is
A) 3.08x
B) 5.45x
C) 2.73x
D) 6.83x