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Nat2105 [25]
3 years ago
8

Kermit's Hardware's (KH) fixed operating costs are $20.8 million and its variable cost ratio is 0.30. The firm has $10 million i

n bonds outstanding with a coupon interest rate of 9%. KH has 200,000 shares of common stock outstanding. The firm has revenues of $32.2 million and its marginal tax rate is 40%. Compute KH's degree of total leverage. a. 26.8 b. 5.5 c. 29.1 d. 4.7
Business
1 answer:
motikmotik3 years ago
3 0

Answer:

Option (a) is correct.

Explanation:

EBIT:

= Revenues - Fixed operating costs - (variable cost ratio × revenues)

= $32.2 - $20.8 - (0.30 × 32.2)

= 1.74  million

KH's degree of total leverage:

= (EBIT + Fixed cost) ÷ (EBIT - Interest)

= (1.74 + 20.8) ÷ [(1.74 - (9% × 10)]

= 26.83

Therefore, the KH's degree of total leverage is 26.83.

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6 0
3 years ago
Suppose Cook Plus manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 22. Cook Plus projects sales
amid [387]

Answer:

Production budget = 835

Explanation:

<em>T</em><em>he production budgeted for a particular period is the expected units to be produced after adjusting the sales budget figures for opening and closing inventories.  </em>

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3 0
3 years ago
Sheridan considers herself a religious person who attends worship services regularly, but she did not attend worship services fo
shusha [124]

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8 0
3 years ago
Read 2 more answers
Which of the following circumstances usually comes before a period of economic contraction?
erik [133]
C
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4 years ago
Gail K. Company manufactures waterproof cell phone covers. During the current month, the purchasing manager purchased $26,700 of
Marianna [84]

Answer:

D : $88,800

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<u>Cost of goods manufactured :</u>

Direct Material used in production                         $ 21,300

Indirect Material used in production                       $  3,700

Direct Labour                                                           $ 34,100

Direct Labour                                                           $  5,900

Manufacturing overhead                                       <u> $ 16,600 </u>

Total Manufacturing cost                                        $ 75100

Add:Beginning Work in process inventory            $7,200

Less: Ending Work in process inventory                <u>$ 0       </u>

Cost of Goods Manufactured                                 <u>$88,800</u>

6 0
3 years ago
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