Answer: a. 1.42
b) 2.74
c) 3.89
Explanation:
a) The Degree of Operating Leverage measures how much operating Income will change by if Sales change.
It is calculated with the formula,
= (Sales - Variable Costs) / (Sales - Variable Costs - fixed costs)
= (960,000 - 532,000) / (960,000 - 532,000 - 127,000)
= 1.42
b) The Degree of financial leverage measures how much Income will change due to a change in operating Income.
The formula is,
=Earnings before Interest and tax / Earnings before Interest and tax - Interest or just Earning before tax
= 301,000/110,000
= 2.74
c. Degree of Total Leverage is a measure of how sensitive the net income of a company is to a change in goods produced and/or sold.
It is calculated by multiplying DOL and DFL.
= 1.42 * 2.74
= 3.89
Should you need any clarification just hit that comment button. Cheers.
Two taxes on employers, two taxes on employees, OASDI and HI taxes and taxes on the net earnings of the self-employed
Answer:
1. Aunt Sandy's Jammin' Jellies (the business) - <u>Entrepreneurs </u>
Entrepreneurship refers to the process of bringing together the various other factors of production to be able to produce goods and services. Aunt Sandy's as a business is an entrepreneur as it brought together factors of production to make Jellies.
2. Anika, a server at Sonic Drive-In - <u>Labor</u>
Labor refers to the actual people who contribute to the business. Anika is a server at the Drive- In and so works there contributing to the success of the business so she is Labor.
3. Your favorite bartender - <u>Labor</u>
Like Anika above, your favorite bartender is also a person contributing to the success of the bar so is considered labor.
