Question

questions 1-4 are mulitple choice please help. this is for finanical accounting. urgent!!!

en seys, a New York based fashion firm has EPS of $2.75. If Its DFL is 1.85, and operating earnings increase by 12%, what will be its new EPS, assuming there is no change in the number of shares of stock? a. $1.22 b. $3.15 C. $3.36 d. $2.97 e. None of the above. 11. What is the Degree of Combined Leverage (DCL) of a firm with a Degree of Operating Leverage (DOL) of 2.4, and Degree of Financial Leverage (DFL) of 1.5? It is: a. 3.90 b. 0.90 C. 1.68 d. 3.60 e. None of the above. 12. What is the definition of contribution margin? a. Sales price minus fixed costs b. Variable cost minus fixed cost c. Fixed cost minus variable cost d. Sales price minus variable cost e. None of the above. 13. A firm has beginning inventory of 550 units at a cost of $8 each. If production during the period was 700 units at $12 each, and sales were 900 units, what is the cost of goods sold assuming the firm uses FIFO. Show Your Calculation

Answer 1

10.

Percentage increase in EPS = DFL x Percentage increase in operating earnings

= 1.85 x 12%

= 22.2%

Increase in EPS = 2.75 x 22.2%

= $0.61

New EPS = 2.75 + 0.61

= $3.36

Correct option is (c)

11.

DCL = DOL x DFL

= 2.4 x 1.5

= 3.60

Correct option is (d)

12.

Contribution margin = Sales price - Variable costs

Correct option is (d)

13.

Cost of goods sold as per FIFO will consist of 550 units from the beginning inventory and 350 units from production units

Cost of goods sold = 550 x 8 + 350 x 12

= 4,400 + 4,200

= $8,600

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