35. The Harding Company manufactures skates. The companys income statement for 20X1 is as follows:...
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35. The Harding Company manufactures skates. The companys income statement for 20X1 is as follows:
| HARDING COMPANY | ||
| Income Statement | ||
| For the Year Ended December 31, 20X1 | ||
| Sales (10,300 skates @ $56 each) | $ | 576,800 |
| Variable costs (10,300 skates at $23) | 236,900 | |
| Fixed costs | 180,000 | |
| Earnings before interest and taxes (EBIT) | $ | 159,900 |
| Interest expense | 61,500 | |
| Earnings before taxes (EBT) | $ | 98,400 |
| Income tax expense (40%) | 39,360 | |
| Earnings after taxes (EAT) | $ | 59,040 |
a. Compute the degree of operating leverage. (Round your answer to 2 decimal places.)
b. Compute the degree of financial leverage. (Round your answer to 2 decimal places.)
c. Compute the degree of combined leverage. (Round your answer to 2 decimal places.)
d. Compute the break-even point in units (number of skates). (Round your answer to the nearest whole number.)
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