Question: Multiple leverage measures Hugg-a-Bugg Soft Toys manufactures teddy bears. The annual sales are 350,000 teddy bears at $26 per teddy bear. Fixed operating costs are

Multiple leverage measures Hugg-a-Bugg Soft Toys manufactures teddy bears. The annual sales are 350,000 teddy bears at $26 per teddy bear. Fixed operating costs are $28,000 while variable operating costs are $16 per teddy bear. The manufacturer pays annually $4,500 of interest on long-term debt and $3,000 of preferred dividends. A tax rate of 40% applies.
a. Calculate the operating break-even point in units.
b. Calculate the degree of operating leverage (DOL) at base sales levels.
c. Calculate the degree of financial leverage (DFL).
d. Calculate the degree of total leverage (DTL).

Step by Step Solution

★★★★★

3.50 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Answers Solution ACalculation of operating break even point Break even pointunitsTotal fix... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Prepare the required journal entries for each transaction of Medieval Castles, Inc. using the perpetual inventory method. June 3 Purchased 150 play castles at a cost of $25 each on account with terms...

Calculate BWPs DFL and DTL before and after the acquisition of the new machine.

Operating leverage measures a company s fixed costs as a percentage of its total costs It is used to evaluate the break even point of a business as well as the likely profit levels on individual...

The Soft Toys Company has collected information on fixed and variable costs for four potential plant locations. a. Plot the total cost curves for the four plant locations on a single graph. b....

Hugg-a-Bugg Soft Toys manufactures teddy bears, selling 350,000 teddy bears at $26 per teddy bear. Fixed operating costs are $28,000 while variable operating costs are $16 per teddy bear. The...

P13-15 Integrative: Multiple leverage measuresHugg-a-Bugg Soft Toys manufactures teddy bears. The annual sales are 350,000 teddy bears at $26 per teddy bear. Fixed operating costs are $28,000 while...

=+LG 1 LG 2 P1315 Integrative: Multiple leverage measures Hugg-a-Bugg Soft Toys manufactures teddy bears, selling 350,000 teddy bears at $26 per teddy bear. Fixed operating costs are $28,000 while...

Comprehensive review problem. Exhibits 16.8 and 16.9 (on pages 796 and 797) present a partial set of financial statements of Chicago Corporation for 2009, including a consolidated statement of income...

Fit-for-Life Foods Inc., a manufacturer of breakfast cereals and snack bars, has experienced several years of steady growth in sales, profits, and dividends while maintaining a relatively low level...

Contribution margin , gross margin, and margin of safety Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores in the greater New York area. It presents the monthly operating...

How much financial risk are you willing to take? By that I simply mean would you risk money on something with a potential high return when it also meant you might lose all the investment?

Section 7805(a) of the Internal Revenue Code authorizes the IRS to perform what activities?

what are the cash flows used for project estimation referred to ? a . net cash flows b . earning before interest and taxes c . revenues d . net income

Question: A rectangular channel is 3m wide and has a depth of flow of 1.5m. The channel roughness ca be assumed to be 0.015 and the bed siope is 0.001. Calculate 1. The height by which the bed shouid...

Suppose you have to choose between two technologies for production of a Wankel engine outboard motor: Technology A uses computer-controlled machinery custom-designed to produce the complex shapes...

Steven Levitt, a father of four and co-author of the book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (2005), had a small problem. When his youngest daughter was born, his...

5.22 Find all prime implicants and all minimum sum-of-products expressions for each of the following functions. (a) AA, B, C, D) = E m(4, 11, 12, 13, 14) + E d(5, 6, 7, 8, 9, 10) (b) AA, B, C, D) = E...

Preparation of appropriations ledger The following transactions and events occurred in Marilyn County during calendar year 2019: 1. The legislature adopted the following budget: Estimated revenues...

Plaintiffs are often discouraged from entering into a release in case their injuries turn out to be graver later on. Group of answer choices True False

P1315 Integrative: Multiple leverage measures Hugg-a-Bugg Soft Toys manufactures teddy bears. The annual sales are 350,000 teddy bears at $26 per teddy bear. Fixed operating costs are $28,000 while...

Calculate the EBIT for sales of 250 , 300 and 350 flower arrangements, respectively Integrative: Multiple leverage measures Hugg-a-Buggb soft toys manufacturers reddy bears. The annual sales are...

Question F asks for: percent change in EBT estimated new EBIT % change in earnings for common stockholders new earnings available for common stockholders EBT will be calculate the earnings available:...

Integrative - Multiple leverage measures Play-More Toys produces inflatable beach balls, selling 400,000 balls per year, Each ball produced has a variable operating cost of $0.82 and sells for $1.13....

P1215 Integrative: Multiple leverage measures Play-More Toys produces inflatable beach balls, selling 400,000 balls per year. Each ball produced has a variable operating cost of $0.84 and sells for...