The Harding Company manufactures skates. The companys income statement for 20X1 is as follows: HARDING...
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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
Sales (11,900 skates @ $88 each) $ 1,047,200
Variable costs (11,900 skates at $39) 464,100
Fixed costs 340,000
Earnings before interest and taxes (EBIT) $ 243,100
Interest expense 69,500
Earnings before taxes (EBT) $ 173,600
Income tax expense (20%) 34,720
Earnings after taxes (EAT) $ 138,880
a. Compute the degree of operating leverage. (Round your answer to 2 decimal places.)
b. Compute the degree of financial leverage. (Round your answer to 2 decimal places.)
c. Compute the degree of combined leverage. (Round your answer to 2 decimal places.) d. Compute the break-even point in units (number of skates). (Round your answer to the nearest whole number.)
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