Please provide correct answer general accounting May Clothing is a retail men's clothing store. May'scost is $20 per shirt. The sales price is $40 per shirt.They plan to sell 400,000 shirts each year, which at thislevel would result in before-tax profit of $2,500,000.What is their degree of operating leverage (DOL) atthis volume level?

Step 1: Define Degree of Operating LeverageThe degree of operating leverage is an accounting term…

Answered: May Clothing is a retail men's clothing…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 6P

See similar textbooks

Similar questions

Correct answer?
Bright Fashions is a clothing store that sells men's shirts. Their variable cost per shirt is $22, and the sales price is $42. Bright Fashions plans to sell 450,000 shirts for the year, and they expect a before-tax profit of $3,000,000 at this volume. Additionally, they received an extra $15,000 from the sale of an old company vehide. What is the degree of operating leverage (DOL) at this volume level? Cosmos Enterprises provides the following partial income statement: Sales: $1,500,000 Less: Variable costs: $700,000 Contribution Margin: $800,000 Less: Fixed costs: $350,000 Maintenance Costs: $50,000Net Operating Income: $450,000 Requirement: What is Cosmos Enterprises' degree of operating leverage? Options: 1.57 4.38 1.86 2.00
The Funky Ties Company sells novelty neckties for men. They have variable costs per tie of $5.00 and fixed costs of $26,000 per year. Funky sells the ties for $20 each and sells 3,000 ties per year. Answer the following questions: Calculate Funky’s breakeven point in unit sales. Calculate the degree of operating leverage, If Funky has financed partially with debt and has annual interest cost of $1,000, what is its degree of financial leverage? Calculate the degree of total leverage,
Catrina Soft Drinks, Inc., sells 500,000 bottles of soft drinks a year. Each bottle produced has a variable cost of P0.25 and sells for P0.45. Fixed operating costs are P50,000. The company has current interest charges of P6,000 and preferred dividends of P2,400. The corporate tax rate is 40 percent. Calculate the degree of operating leverage, the degree of financial leverage, and the degree of total leverage. (choose the letter of the correct answer)a. Operating – 0.5, financial – 0.25 , total 1.0b. Operating – 1.0, financial – 0.75 , total 1.75c. Operating – 1.5, financial – 1.0 , total 2.5d. Operating – 1.5, financial – 0.25 , total 1.0e. Operating – 2.0, financial – 1.25 , total – 2.5
Sunrise Company sells 3, 650 frying pans per year. The owner has invested $80, 000 in the business and desires an 8% return on his investment (ROI = Net Income Investments). Product Costs VC $4.5 per pan FC $78,000 per year Selling and Administrative Costs VC $3.00 per pan FC $15,000 per year If Sunrise uses the income statement bottom-up forecasting to estimate revenue and absorption cost-based pricing, what is its selling price and markup percentage? A. 5.32% and $34.73 B. 34.25% and $34.73 C. 27.48% and $32.98 D. 363% and $34.73
Don't use ai
Choose the correct letter of answer: Company B sells 500,000 bottles of soft drinks a year. Each bottle produced has variable cost of P0.25 and sells for P0.45. Fixed operating costs are P50,000.00. The company has current interest charges of P6,000.00 and preferred dividends of P2,400.00. The corporate tax rate is 40%. Calculate the degree of operating leverage and degree of financial leverage. a. 2 and 1.25b. 2.5 and 1.5c. 3 and 1.75d. 2.5 and 2.0e. 3 and 2.25
??
L. Boyd Company's total fixed costs are $130,000 per year. The company's break-even point in sales dollars is $250,000. If sales are $350,000 next year, what will operating income be? (HINT: Use your knowledge of the ‘ratios’ to solve this. Ignore income taxes.)
Firm M expects to earn $210,000 next year after taxes. Sales will be $4 million. This firm makes combined bookshelf and desk unit for college students. This units sell for $200 each and have a variable cost of $150 per unit. This firm pays 30 percent tax rate on its earnings. Based on the information provided, estimate the firm’s fixed costs expected next year and estimate the firm’s break-even point in units and dollars.
Night Shades Inc. (NSI) manufactures biotech sunglasses. These sunglasses sell for $150 each, and cost $70 each to produce. Night Shades Inc. has fixed costs of $100,000. a. Calculate Night Shades' Breakeven point. b. how much profit (loss) will Night Shades have if it sells 500 sunglasses? 4,000 sunglasses? c. Night Shades' manager expects an operating profit of $200,000, How many sunglasses must be sold to attain this profit?
Tinsley Plastics manufactures plastic bottles used for beverages and household cleaners. The average net book value (NBV) of assets during the quarter is estimated as $500,000. If the required rateof return is 10% on average assets and the firm wants to have residual income (RI) of $100,000 forthis quarter, what must its profits be?

SEE MORE QUESTIONS

Recommended textbooks for you

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Principles of Cost Accounting

Accounting

ISBN:

9781305087408

Author:

Edward J. Vanderbeck, Maria R. Mitchell

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS

May Clothing is a retail men's clothing store. May's cost is $20 per shirt. The sales price is $40 per shirt. They plan to sell 400,000 shirts each year, which at this level would result in before-tax profit of $2,500,000. What is their degree of operating leverage (DOL) at this volume level?