Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Chapter 13, Problem 13.3WUE
Summary Introduction

To discuss:

The C Company sold 15,000 units at a price of $20 per unit and the firm incurs the operating costs of $30,000 and variable cost of $12 per unit. Calculate the degree of operating leverage at sales of 15,000 units

Introduction:

The capital structure is the company’s total finances in their total operations and growth through multiple fund sources. The debt comes through the form of bond issues and long term notes payable, while the equity is segregated as common stock, preferred and retained earnings. The short term debt like working capital requirements are considered as part of the capital structure.

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The Mongolian Supply Co. sells its products for an average of $35 per unit with a variable cost per unit of $21. The company has fixed operating costs of $1,050,000.   Calculate the firm's operating breakeven point in units.   Using a base of 100,000 units, what is the firm's degree of operating leverage?
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Marcus Corporation currently sells 150,000 units of products a year at a price of RM 4.00 per unit. Its variable costs are approximately 30 % of sales, and its fixed costs amount to 50% of revenues at its current output level. Although fixed costs are based on revenues at the current output level, the cost is fixed. What is Marcus' degree of operating leverage in sales (RM)?
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