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Homework answers / question archive / The Harding Company manufactures skates
The Harding Company manufactures skates. The company's income statement for 2010 is as follows:
Sales (12,100 @ $92 each) $1,113,200
Less:
Variable costs (12,100 skates at $41) 496,100
Fixed costs 360,00
Earnings before interest and taxes(EBIT) 257,100
Interest expense 70,500
Earnings before taxes 186,600
Income tax expense (40%) 74,640
Earnings after taxes (EAT) $111,960
a. Compute the degrees 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.)
