The company BAC inc. sells a single product for $ 5 a unit. Its annual fixed operating costs are estimated at $ 180,000 including $ 30,000 in depreciation. Its unit variable cost is estimated at $ 2. The amount of interest paid annually to bondholders is $ 45,000. The corporate tax rate is 35%. a) Estimate the general breakeven point of the business? b) Estimate the company's cash flow breakeven point? c) Estimate the operating leverage of the business at a sales level of d) 120,000 units? e) Estimate the company's financial leverage for an EBIT of $ 50,000? f) Estimate the total leverage of the business at a sales level of 80,000 units?

The company BAC inc. sells a single product for $ 5 a unit. Its annual fixed operating costs are estimated at $ 180,000 including $ 30,000 in depreciation. Its unit variable cost is estimated at $ 2. The amount of interest paid annually to bondholders is $ 45,000. The corporate tax rate is 35%. a) Estimate the general breakeven point of the business? b) Estimate the company's cash flow breakeven point? c) Estimate the operating leverage of the business at a sales level of d) 120,000 units? e) Estimate the company's financial leverage for an EBIT of $ 50,000? f) Estimate the total leverage of the business at a sales level of 80,000 units?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 11P: The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are...

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