Putih Berhad sells small kitchen gadgets for RM15 each. The gadgets have a variable cost of...

Putih Berhad sells small kitchen gadgets for RM15 each. The gadgets have a variable cost of RM4 per unit, and Putih Berhad fixed operating costs are RM220,000 per year. Putih Berhad capital structure includes 55% debt and 45% equity. Annual interest expense is RM25,000 and the corporate tax rate is 35%.

Required:

a) Calculate the break-even point in units

b) If Putih Berhad sells 25,000 units, calculate the firm's EBIT and net income.

c) If sales increase 20% from 25,000 units to 30,000 units, estimate the firm's expected EBIT and net income.

d) Does Putih Berhad use operating leverage and/or financial leverage? Explain.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

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