1) Emma corporation has $1,500,000 debt with 12% interest and $480,000 preferred equity with 15% annual dividend. The company was able to sell 50,000 units of is product at $80 per unit in the current year. Its contribution margin ratio is 30% and all costs of goods sold are variable. a) If the firm's current fixed operating cost (including depreciation expense) is $600,000, what is the firm's degree of operating leverage? b) How much addition could the firm make to its fixed operating cost if it can reduce its variable cost per unit by 20% and wants to keep the accounting break-even point units unchanged from current one? c) If the firm planning to increase its operating leverage to three times more than now, would it be advisable? d) If the firm is facing a downward sales forecast and it has a high degree of operating leverage, what immediate action should be called for? 2) Use the following information to answers given questions Current assets =$50,000 Fixed asset turnover = 4 times Total variable costs = total costs of goods sold Operating profit margin = 20% Interest = $10,000 per year No. of units sold = 5,000 units Price per unit = $100 Fixed operating cost = $30,000 (including depreciation) Depreciation expense = $10,000 Company is using only debt and common equity No. of common stock = 1,000 shares a) Find accounting break even in units and in sales. b) Find cash break even in units. c) Find degree of operating leverage. d) If sales of this company increase by 20%, how much EBIT would the firm generate