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BUS 321 Chapter 13-Capital Structure 1. A firm has fixed operating costs of $100,000, sales price per unit of $25, and variable costs per unit of $17. Calculate the firm's operating breakeven point in units and sales dollars. 2. Stinson Corporation reported sales of 20,000 units which resulted in $1,100,000 of sales revenue. Stinson also reported variable costs per unit of $35 and fixed operating costs of $300,000. Calculate the contribution margin along with the unit contribution margin 3. Tony's beach T-shirts has annual fixed operating costs of $75,000. Tony sells his t-shirts for $15 per each and incurs variable costs per unit of $5. If Tony's target net operating income is $25,000, compute the number of units and sales dollars he must sell to achieve this target. 4. A firm has fixed operating costs of $600,000, a sales price per unit of $20, and a variable cost per unit of $12. At a base sales level of 500,000 units, what is the firm's degree of operating leverage (round to 2 decimal places). A firm has EBIT of $400,000, interest expense of $80,000, preferred dividends of $96,000 and a tax rate of 40%, what is the firm's degree of financial leverage at a base EBIT level of $400,000? 5. Tony's beach T-shirts has annual fixed operating costs of $75,000. Tony sells his t-shirts for $15 per each and incurs variable costs per unit of $5. If Tony's target net operating income is $25,000, compute the number of units and sales dollars he must sell to achieve this target. 3

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