Haunted Forest, Incis selling fog machines. Use the following information about

ID: 2798511 • Letter: H

Question

Haunted Forest, Incis selling fog machines. Use the following information about Haunted Forest, Inc. to answer the following questions Average selling price per unit $305. Variable cost per unit $220 Units sold 305 Fixed costs $15483 Interest expense $4.193 Based on the data above. what wit and sold to change 4 8 parcent? Nou should calculate the degree of total combined leverag be the resulting percentage change in earnings per share if they expect units produced e firat Round the anwer to two decimals Your Anawe Ewer

Explanation / Answer

Solution :- Income Statement

Sales (305 * 305)

(-) Variable cost (305 * 220)

93025

67100

Contribution margin

(-) Fixed costs

25925

15483

Earnings before interest and tax (EBIT)

(-) Interest expense

10442

4193

Degree of combined leverage (DCL) = Contribution margin / Earnings before tax (EBT).

= 25925 / 6249

= 4.1487 (approx).

Degree of combined leverage (DCL) = Percentage change in earning per share / Percentage change in sales

4.1487 = Percentage change in earnings per share / 4.8 %

Percentage change in earnings per share = 4.1487 * 4.8 %

Percentage change in earnings per share (EPS) = 19.91376 % (Rounded off to 19.91 %)

Conclusion :- Percentage change in earnings per share (EPS) = 19.91 % (approx).

Particulars Amount ($)