Please see this empty income statement from Spuds and Suds for FY 2020. Calculate the degree of combined leverage if price per units is 17.00. Please give your answer rounded to two decimal places.
Your Answer:
Spuds and Suds Income Statement
For the Year Ended Dec. 31, 2020 2020
Sales
Less: Variable Costs Less: Fixed Costs Earnings Before Interest and Taxes Less: Interest Expense Earnings Before Taxes Taxes Net Income
$
400,000
$
50,000
Less: Preferred Dividends Net Income Available to Common
$
50,000
Common Shares Outstanding Earnings per Share
1,000,000
Assumptions
Price per Unit Unit Sales Variable Costs as a Percent of Sales Tax Rate
150,000 65% 20%
Operating Break-even Point (Units) Operating Break-even Point (Dollars)
Units to Meet EBIT Target