Reference no: EM133000523
Question - The Harding Company manufactures skates. The company's income statement for 20X1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20X1
Sales (10,600 skates @ $62 each) $657,200
Variable costs (10,600 skates at $26) 275,600
Fixed costs 210,000
Earnings before interest and taxes (EBIT) $171,600
Interest expense 63,000
Earnings before taxes (EBT) $108,600
Income tax expense (40%) 43,440
Earnings after taxes (EAT) $65,160
Required -
a. Compute the degree of operating leverage.
b. Compute the degree of financial leverage.
c. Compute the degree of combined leverage.
d. Compute the break-even point in units (number of skates).
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