22 The Sterling Tire Company's income statement for 20XX is as follows: STERLING TIRE COMPANY Income Statement Year ended December 31, 20XX Sales (55,000 tires at $70 each) Less: Variable costs (55,000 tires at $50) Contribution margin Less: Fixed costs $ 3,850,000 2,750,000 1,100,000 900,000 Earnings before interest and taxes (EBIT) 200,000 Interest expense 75,000 Earnings before taxes (EBT) 125,000 Income tax expense (35%) 43,750 Earnings after taxes (EAT) $ 81,250 Given this income statement, compute the following: a. Degree of operating leverage. (Round the final answer to 2 decimal places.) DOL b. Degree of financial leverage. (Round the final answer to 2 decimal places.) DFL c-1. Degree of combined leverage. (Do not round the intermediate calculations. Round the final answer to 2 decimal places.) c-2. Using your answers to a. and b. calculate the percentage increase in EBIT and EBT from a 20 percent increase in sales volume. (Do not round the intermediate calculations. Round the final answers to 2 decimal places.) EBIT EBT c-3. Does financial or operating leverage have the greater impact? ODFL DOL d. Break-even point in units. (Round the final answer to the nearest whole number.) Break-even point tires e. Break-even point considering the interest expense as a fixed cost. Break-even point tires