-The Degree of Combined Leverage Is:
A) 2

question 41

Multiple Choice

$$\begin{array} { l r } \text { Sales } ( 100,000 \text { units) } & \$ 1,000,000 \\\text { Variable costs } & \underline { 300,000 } \\\text { Contribution margin } & 700,000 \\\text { Fixed manufacturing costs } & \underline { 250,000 } \\\text { Operating income } & 450,000 \\\text { Interest } & \underline { 60,000 } \\\text { Earnings before taxes } & 390,000 \\\text { Taxes (at } 31 \% \text { ) } & \underline { 120,900 } \\\text { Net Income } & \underline { \$ 269,100 } \\\text { Shares outstanding } & 10,000\end{array}$$
-The Degree of Combined Leverage is:

• A) 2.79x.
• B) 1.90x.
• C) 1.79x.
• D) 3.46x.

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Definitions:

Ammonia

A colorless gas with a penetrating odor, NH3, which is a byproduct of nitrogenous waste in organisms and used in various industrial processes.

Urea

Nitrogen-containing waste compound derived from ammonia; water is required to excrete it.

Malpighian Tubes

The excretory system of certain arthropods, like insects and spiders, used for removing wastes and maintaining osmotic balance.

Liver

Abdominal organ that produces plasma proteins and bile, filters the blood, and stores glycogen.