Sales (35,000 tires at $90 each) Variable costs (35,000 tires at $45) 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 $ 3,150,000 1,575,000 550,000 $ 1,025,000 57,500 $ 967,500 290, 250 $ 677,250 d. Compute the break-even point in units. Note: Round your answer to the nearest whole number.

Sales (35,000 tires at $90 each) Variable costs (35,000 tires at $45) 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 $ 3,150,000 1,575,000 550,000 $ 1,025,000 57,500 $ 967,500 290, 250 $ 677,250 d. Compute the break-even point in units. Note: Round your answer to the nearest whole number.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter3: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 7EB: Delta Co. sells a product for $150 per unit. The variable cost per unit is $90 and fixed costs are...

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