Haunted Forest, Inc.is selling fog machines. Use the following information about Haunted Forest, Inc. to answer...

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Haunted Forest, Inc.is selling fog machines. Use the followinginformation about Haunted Forest, Inc. to answer the followingquestions. Average selling price per unit $344. Variable cost perunit $191 Units sold 349 Fixed costs $17,627 Interest expense$4,831 Based on the data above, what is the degree of total(combined) leverage of Haunted Forest, Inc.?
Round the answer to two decimals

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3.9 Ratings (601 Votes)

Degree of combined leverage	=	Contribution Margin	/	EBT
	=	$ 53,397	/	$ 30,939
	=	1.73

Working:

EBIT means Earning Before Interest and Taxes.

Contribution Format Income Statement:

		Per Unit	Total
Sales		$ 344	$ 1,20,056
Variable cost		$ 191	$ 66,659
Contribution margin		$ 153	$ 53,397
Fixed Cost			$ 17,627
EBIT			$ 35,770
Interest			$ 4,831
EBT			$ 30,939

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Transcribed Image Text

Haunted Forest, Inc.is selling fog machines. Use the followinginformation about Haunted Forest, Inc. to answer the followingquestions. Average selling price per unit $344. Variable cost perunit $191 Units sold 349 Fixed costs $17,627 Interest expense$4,831 Based on the data above, what is the degree of total(combined) leverage of Haunted Forest, Inc.?Round the answer to two decimals