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

question 5

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 combined leverage (DCL) is ________.

• A) 3.08x
• B) 5.45x
• C) 2.25x
• D) 6.83x

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Definitions:

Commercial Treaties

Agreements between countries that govern the terms of trade, investment, and economic relations.

Founders

Refers to the individuals who played a significant role in establishing an institution, nation, or organization, often used in the context of the founding fathers of the United States.

Philosophical Principles

Fundamental truths or propositions that serve as the foundation for a system of belief or behavior or for a chain of reasoning.

Commerce

The activity of buying and selling, especially on a large scale, encompassing legal, economic, political, social, cultural, and technological systems.