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a) Chilli Red Boat Berhad reports sales of RM4,000,000, variable costs of RM500,000, fixed operating costs of RM1,250,000, and interest expense of RM350,000. The

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a) Chilli Red Boat Berhad reports sales of RM4,000,000, variable costs of RM500,000, fixed operating costs of RM1,250,000, and interest expense of RM350,000. The corporation's EBIT is RM3,250,000 and its tax rate is 30%. Required: i. Calculate the company degree of operating leverage, the degree of financial leverage and the degree of combined leverage. (6 Marks) ii. If the company is able to increase its sales by 15%, by what percent would EBIT increase? By what percent EPS will increase? (4 Marks) b) Maroon Boot Berhad will produce 94,000 pairs of boots next year. Variable costs are 35% of sales, while fixed costs total RM223,000. At what price must each pair of boots be sold for Maroon Boot Berhad to obtain an EBIT of RM1,391,500? (2 Marks)

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