Use the Below Information to Answer the Following Question Refer to the Table

question 22

Multiple Choice

Use the below information to answer the following question.
$\begin{array}{ll} \text {Sales (1,000 units) }&\$200,000\\ \text {Variable costs }&110,000\\\text { Contribution margin } & 90,000 \\\text { Fixed manufacturing costs } & 40,000\\\text { Operating income } & 50,000 \\\text { Interest } & 10,000\\\text { Earnings before taxes } & 40,000 \\\text { Taxes }(30 \%) & 12,000\\ \text {Net income }&\$28,000\\ \text {Shares Outstanding }&1,000\\\end{array}$
Refer to the table. The degree of financial leverage (DFL) is ________.

• A) 3.50x
• B) 1.40x
• C) 1.95x
• D) 1.25x

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Definitions:

Constrained

Subject to limitations or restrictions.

Computer-Mediated

Refers to communication that takes place between humans or between humans and computers through the use of technology.

Streaming Media

Digital content such as video or audio that is continuously received and presented to an end-user while being delivered by a provider over the Internet.

Listservs

Electronic mailing list software that allows for the distribution of messages, discussions, and other information to subscribers of the list.