Use the below information to answer the following question. Sales (1,000 units) Variable costs Contribution margin $ 200,000 110,000 90,000 40,000 50,000 10,000 Fixed manufacturing costs Operating income Interest Earnings before taxes Taxes (30%) Net income Shares Outstanding Refer to the table. The degree of combined leverage (DCL) is 40,000 12,000 $ 28,000 1,000

Use the below information to answer the following question. Sales (1,000 units) Variable costs Contribution margin $ 200,000 110,000 90,000 40,000 50,000 10,000 Fixed manufacturing costs Operating income Interest Earnings before taxes Taxes (30%) Net income Shares Outstanding Refer to the table. The degree of combined leverage (DCL) is 40,000 12,000 $ 28,000 1,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Operating Leverage Beck Inc. and Bryant Inc. have the following operating data: Beck Inc. Bryant Inc. Sales $275,600 $882,000 Variable costs 110,600 529,200 Contribution margin $165,000 $352,800 Fixed costs 110,000 205,800 Income from operations $55,000 $147,000 a. Compute the operating leverage for Beck Inc. and Bryant Inc. If required, round to one decimal place. Вeck Inc. Bryant Inc. 2.4 b. How much would income from operations increase for each company if the sales of each increased by 20%? If required, round answers to nearest whole number. Dollars Percentage Вeck Inc. $ 33,000 60 V % Bryant Inc. 70,560 57 X % c. The difference in the increases of income from operations is due to the difference in the operating leverages. Beck Inc.'s higher v operating leverage means that its fixed costs are a larger percentage of contribution margin than are Bryant Inc.'s.
What is the Profit Margin for Stevenson Corporation, given the following info: Invested Assets = $550,000 Sales $660,000 = Income from Operations = $99,000 Desired minimum rate of return = 15.0% O 16.0% O 18.0% 15.0% 20.0%
Alpha Corporation reported the following data for its most recent year: sales, $670,000; variable expenses, $420,000; and fixed expenses, $200,000. The company's degree of operating leverage is closest to: Multiple Choice O 5.00 2.70 2.00 13.00
If sales are $295,000, variable costs are 75% of sales, and operating income is $51,500, the operating leverage is a.4.3 b.1.1 c.1.4 d.0.0
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For the Year Ended December 31, 20X1 Sales (23,000 tires at $66 each) Variable costs (23,000 tires at $33) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense (30%) Earnings after taxes (EAT) a. Compute the degree of operating leverage. Note: Round your answer to 2 decimal places. Degree of operating leverage b. Compute the degree of financial leverage. Note: Round your answer to 2 decimal places. Degree of financial leverage ............... c. Compute the degree of combined leverage. Note: Round your answer to 2 decimal places. Degree of combined leverage d. Compute the break-even point in units. $ 1,518,000 759,000 430,000 $ 329,000 51,500 $ 277,500 83,250 $ 194,250
Sales revenue is $11,250,000 Variable expenses is $2,500,000 Total expenses is $8,750,000 Operating income is $2,5000,000 How would you find the degree of operating leverage?
Consider the following summary modified income statement for Tech Inc.: Sales $593,000 Variable Operating Costs 252,000 Contribution Margin $341,000 Fixed Operating Costs 121,000 Operating Income $220,000 Interest Expense 26,000 Net Income $194,000 Calculate Tech's degree of operating leverage. A В C E 1 2 Degree of Operating Leverage = 4 5 7 8 9 10 3. 6.
Sales (30,000units) P 150,000 Variable costs 100,800 Contribution margin P 49, 200 Fixed manufacturing costs 24,000 Operating income P 25,200 Interest 18,000 Earnings before taxes P 7,200 Taxes (at 31%) 2,160 Net income P 5,040 Shares outstanding 600 The degree of combined leverage…
If financial leverage of a firm is 4, Interest 6,00,000, Operating Leverage is 3, Variable cost to sales is 66.66%, Income tax rate is 30%, Number of Equity Shares 1, 00, 000. Calculate fixed cost and EPS of the firms. (For your reference, OL = Contribution/EBIT; FL = EBIT/EBT and CL = OL*FL)
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