Big company makes lug nuts and sell them at$6 a pack of 4 with a variable cost of $3.50 per pack. Their fixed operating costs are $50,000 annually. he pays $13,000 in interest each year along with $7,000 in perferred dividend, his current selling price is $30,000 packs annually. His tax rate is 40%.
a) What is the operating breakeven point?
b) Based on his current annual level of sales and the interest and the devidends he has to pay, calculate the EBIT and earnings available for common stockholders.
c) Calculate their DOL, DFL and DTL (Degree of Total Leverage)