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Consider a firm whose financial information is as follows: Number of units produced and sold (per year) 15,000 Sales price per unit 6.00 Fixed operating

Consider a firm whose financial information is as follows:

Number of units produced and sold (per year)

15,000

Sales price per unit

6.00

Fixed operating costs (per year)

7,000

Fixed financing costs (per year)

3,000

Variable cost per unit

4.50

Earnings before interest and tax

15,500

At 15,000 units produced and sold, calculate:

  1. degree of operating leverage (DOL)
  2. degree of financial leverage (DFL
  3. degree of total leverage (DTL)

  1. If the number of goods produced and sold decreases by 10%, what is the percentage change of the firms operating profit (EBIT)?
  2. Calculate the firms breakeven quantity of sales.

Please show me the calculations. Thank you in advance.

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