Accounting help PLEASE!!!

[Kingofthehill]

Hey guys.
I have some answers to the following but have a feeling I'm doing them wrong. If you could just help me out please.

The Company produces a single type of MP3 player that can be sold at a constant price of $200 per player. Variable cost per player is $150, and fixed costs amount to $250,000 per year. The firm pays a tax rate of 30%. The company’s assets, valued at $600,000, are financed by 60% debt and 40% equity, with the latter in the form of 1,000 ordinary shares (no preference shares issued). The firm pays annual interest of 9% on its debt financing.
(a) Calculate the annual break-even volume of MP3 player sales.
(b) Calculate the firm’s earnings before interest and taxes (EBIT) and earnings per share (EPS) at sales volumes of 6,000, 7,500 and 9,000 players.
(c) Calculate the firm’s degree of operating leverage (DOL), degree of financial leverage (DFL) and degree of total leverage (DTL) at a volume of sales of 7,500 players. (Round your answers to 2 decimal places)

Thank you

 

[stapel]

I have some answers to the following but have a feeling I'm doing them wrong. If you could just help me out please.

The Company produces a single type of MP3 player that can be sold at a constant price of $200 per player. Variable cost per player is $150, and fixed costs amount to $250,000 per year. The firm pays a tax rate of 30%. The company’s assets, valued at $600,000, are financed by 60% debt and 40% equity, with the latter in the form of 1,000 ordinary shares (no preference shares issued). The firm pays annual interest of 9% on its debt financing.
(a) Calculate the annual break-even volume of MP3 player sales.
(b) Calculate the firm’s earnings before interest and taxes (EBIT) and earnings per share (EPS) at sales volumes of 6,000, 7,500 and 9,000 players.
(c) Calculate the firm’s degree of operating leverage (DOL), degree of financial leverage (DFL) and degree of total leverage (DTL) at a volume of sales of 7,500 players. (Round your answers to 2 decimal places)

What are the "some answers" that you already have? What were your steps in arriving at those answers? Once we can see what you're doing, we'll be able to start discussing errors, if any.

Please be complete. Thank you!

 

[Kingofthehill]

What are the "some answers" that you already have? What were your steps in arriving at those answers? Once we can see what you're doing, we'll be able to start discussing errors, if any.

Please be complete. Thank you!

Thanks for the reply.

So far,

A) (200 – 150 = 50) = (250000 / 50) = $5000)

B) Ebit = (P x Q) - FC - (VC - Q)
So, (200 x 6000) - 250000 - (150 x 6000) = 50000
(200 x 7500) - 250000 - (150 x 7500) = 125000
(200 x 9000) - 250000 - (150 x 9000) = 200000


C) DOL = Q x (P - VC) / Q X (P - VC) - FC
= 7500 x (200 - 150) / 7500 x (200 - 150) - 250000 = 3


I can't wrap my head around the others and no matter how much i read I just can't figure out the EPS, DTL, DFL. Which leads me to believe my other answers may be wrong. I'm going crazy.

Also
P = Price per unit
Q = Units produced
FC = Fixed Cost
VC = Variable Cost

Thanks for the response and help!

 

[Ishuda]

Hey guys.
I have some answers to the following but have a feeling I'm doing them wrong. If you could just help me out please.

The Company produces a single type of MP3 player that can be sold at a constant price of $200 per player. Variable cost per player is $150, and fixed costs amount to $250,000 per year. The firm pays a tax rate of 30%. The company’s assets, valued at $600,000, are financed by 60% debt and 40% equity, with the latter in the form of 1,000 ordinary shares (no preference shares issued). The firm pays annual interest of 9% on its debt financing.
(a) Calculate the annual break-even volume of MP3 player sales.
(b) Calculate the firm’s earnings before interest and taxes (EBIT) and earnings per share (EPS) at sales volumes of 6,000, 7,500 and 9,000 players.
(c) Calculate the firm’s degree of operating leverage (DOL), degree of financial leverage (DFL) and degree of total leverage (DTL) at a volume of sales of 7,500 players. (Round your answers to 2 decimal places)

Thank you

Hey guys.
I have some answers to the following but have a feeling I'm doing them wrong. If you could just help me out please.

The Company produces a single type of MP3 player that can be sold at a constant price of $200 per player. Variable cost per player is $150, and fixed costs amount to $250,000 per year. The firm pays a tax rate of 30%. The company’s assets, valued at $600,000, are financed by 60% debt and 40% equity, with the latter in the form of 1,000 ordinary shares (no preference shares issued). The firm pays annual interest of 9% on its debt financing.
(a) Calculate the annual break-even volume of MP3 player sales.
(b) Calculate the firm’s earnings before interest and taxes (EBIT) and earnings per share (EPS) at sales volumes of 6,000, 7,500 and 9,000 players.
(c) Calculate the firm’s degree of operating leverage (DOL), degree of financial leverage (DFL) and degree of total leverage (DTL) at a volume of sales of 7,500 players. (Round your answers to 2 decimal places)

Thank you

Start with (a) and write down what you need. break-even means you income is equal to your costs, so
(i) income = n * 200 where n is the number of MP3 units sold or
I = 200 n
(ii) costs = operating cost + taxes
operating costs
- fixed = 250000
- variable = 150 n
- debt service (interest) = 0.09 * 0.60 * 600000 = 32400
So
operating_costs = 282400 + 150 n
and
tax = 0.3 * (income - operating costs)
= 0.3 *( 200 n - 282400 - 150 n)
= 15 n - 84720
and total costs C are
C = 282400 + 150 n + 15 n - 84720 = 197860 + 165 n

We are given I = C for breakeven or
200 n = 197860 + 165 n
or
Break even = 5648 units (assuming I haven't made some stupid mistake).

The other parts are basically the same. Write down the various parts needed to answer the question, 'add' (includes subtract) them up, then, if needed compute the answer, i.e. such as n was computed above. Note that that operating cost might need to be broken down further to 'plant costs' and interest, for example