The Harding Company manufactures skates. The company’s income statement for 2013 is as follows.
HARDING COMPANY
Income Statement
For the year ended December 31, 2013
Sales (10,500 skates at $60 each)………………………………………………………$630,000
Less: Variable costs (10,500 skates at $25)…………………………………………….262, 000
Fixed Costs……………………………………………………………………….200, 000
Earnings before interest and taxes (IBIT)………………………………………………$167,500
Interest expense…………………………………………………………………………62,500
Interest before taxes (EBIT)…………………………………………………………….$105,000
Income tax expense (30%)……………………………………………………………__31,500___
Earnings after taxes (EAT)…………………………………………………………….$ 73,500
Giving this income statement, compute the following:
a. Degree of operating leverage
b. Degree of financial leverage.
c. Degree of combined leverage.
d. Break even points in units.