What is the degree of combined leverage for this question?

label Business
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

Haunted Forest, Inc.is selling fog machines.

Use the following information about Haunted Forest, Inc. to answer the following questions.

Average selling price per unit $301.

Variable cost per unit $203

Units sold 353

Fixed costs $15,279

Interest expense $4,190

 Based on the data above, what is the degree of total (combined) leverage of Haunted Forest, Inc.?

Round the answer to two decimals

Oct 3rd, 2015

Thank you for the opportunity to help you with your question!

Haunted Forest, Inc.is selling fog machines.

Use the following information about Haunted Forest, Inc. to answer the following questions.

Average selling price per unit $301.

Variable cost per unit $203

Units sold 353

Fixed costs $15,279

Interest expense $4,190

 Based on the data above, what is the degree of total (combined) leverage of Haunted Forest, Inc.?

Round the answer to two decimals


Answer

DFL = Q(P-V)-FC/[ Q(P-V)-FC-IE]

DFL = 353 x (301-203)-$15,279/[353 x (301-203)-$15,279-$4,190]

DFL = $19,315 /[$19,315-$4,190]

DFL = $19,315 /$15,125

DFL = 1.28

DOL = Q(P-V)/ /[ Q(P-V)-FC]

DOL = 353 x (301-203)/[ 353 x (301-203)-$15,279]

DOL = $34,594/ $19,315

DOL = 1.79

Total Combine leverage = DOL x DFL

Total Combine leverage = 1.79 x 1.28

Total Combine leverage = 2.29


All answer are rounded to two decimal place .


Please let me know if you need any clarification. I'm always happy to answer your questions.
Oct 3rd, 2015

Studypool's Notebank makes it easy to buy and sell old notes, study guides, reviews, etc.
Click to visit
The Notebank
...
Oct 3rd, 2015
...
Oct 3rd, 2015
Sep 24th, 2017
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer