a) Show the level of EBIT and EPS in a. an income statement if sales increase by 50%.

b) Calculate the degree of operating, financial, and total leverage of this firm.

c) How would the operating, financial, and total leverage be affected if fixed costs and interest expenses increase? Is that good for the firm?

The income statement of a company is given below. The firm has 75,000 shares outstanding. Sales $600,000 300,000 Variable costs 300,000 Total contribution margin Fixed costs EBIT Interest expense Earnings before taxes Taxes (30%) Net income 100,000 200,000 50,000 150,000 45,000 $105,000