Larimore Company sales are DH 560,000. The company has variable costs equal to 40% of sales and

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Larimore Company sales are DH 560,000. The company has variable costs equal to 40% of sales and total fixed costs of DH 150,000

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a) What is the company's break-even point in sales dollars? (Show your workings)

b) Compute the company's net income and operating leverage (rounded to one decimal place) if sales increase by 10%. (Show your workings)

c) Describe the effect on operating leverage as a company's sales increase and it moves further beyond its break-even point.

d) Discuss the impact of the advertising cuts on the company's break-even point and margin of safety.

Related Book For answer-question

Fundamentals of corporate finance

ISBN: 978-0470876442

2nd Edition

Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates

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Posted Date: Aug 20, 2020 07:30 PM

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Larimore Company sales are DH 560,000. The company has variable costs equal to 40% of sales and

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Part a Sales 560000 LessVariable Costs 224000 Contribution Margin 336000 LessFixed Costs 150000 Net ... View the full answer

Fundamentals of corporate finance

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