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Calculate operating break-even point in units for company

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Reference no: EM133020069

Question - Electra (Pty) Ltd is a manufacturer of two-plate gas cookers suitable for household and outdoors purposes. The company sold 100 000 units in 2018 at R80.00 each. The variable operating cost is R55.50 per unit and the fixed operating cost is R400 000. Annual interest charges are R50 000 and the company has 12 000 preference shares bearing a fixed dividend of R5.00 per share. The company issued 250 000 ordinary shares. The relevant tax rate is 30%.

Required - Show all calculations

1. Calculate the operating break-even point in units for the company.

2. Calculate the company's earnings per share in tabular format at both the 2018 level of sales and an estimated sales level of 150 000 units for 2019.

3. Using the current 2018 level of sales as the base, calculate Electra's degree of operating leverage.

4. Using the current 2018 level of sales as the base, calculate Electra's degree of financial leverage.

5. Calculate the degree of total leverage at the 2018 sales level.

Reference no: EM133020069

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