12–15 IntegrativeMultiple leverage mcasures and prediction Carolina Fastencr, Inc., makes a patented marine bulkhead latch that wholesalces for $6.00. Each latch has variable operating costs of $3.50. Fixed operating costs are $50,000 per year. The firm pays $13,000 interest and preferred dividends of $7,000 per year. At this point, the firm is selling 30,000 latches a ycar and is taxed at 40%. a. Calculate Carolina Fastener's operating breakeven point. b. On the basis of the firm's current sales of 30,000 units per ycar and its interest and preferred dividend costs, calculate its EBIT and net profits. c. Calculate the firm's degrcc of operating leverage (DOL).

12–15 IntegrativeMultiple leverage mcasures and prediction Carolina Fastencr, Inc., makes a patented marine bulkhead latch that wholesalces for $6.00. Each latch has variable operating costs of $3.50. Fixed operating costs are $50,000 per year. The firm pays $13,000 interest and preferred dividends of $7,000 per year. At this point, the firm is selling 30,000 latches a ycar and is taxed at 40%. a. Calculate Carolina Fastener's operating breakeven point. b. On the basis of the firm's current sales of 30,000 units per ycar and its interest and preferred dividend costs, calculate its EBIT and net profits. c. Calculate the firm's degrcc of operating leverage (DOL).

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter16: Financial Planning And Control

Section: Chapter Questions

Problem 20PROB

See similar textbooks