Evans Products Limited (EPL) is considering introducing a new product that will sell for $2.00 per unit. There are two ways to produce this product. The first is capital intensive. With this method, the fixed costs would be $60,000, variable cost $0.80 per unit, and interest expense $12,000. The second method is labour intensive. With this method, the fixed costs would be $12,000, variable costs $1.60 per unit, and interest expense $4,000. EPL has a tax rate of 40%. and they have 8,000 common shares outstanding. show your work Required: 1. Calculate the break-even units for both production methods and prove the break-even calculated is correct! 2. Calculate the degree of operating leverage (DOL) for EPLs two cost structures at a production of 60,000 units. Discuss the implication of your answers. When using DOL, what assumptions must you make? 3. Which production method is a better option for EPL if they produced 60,000units? 4. Calculate the degree of financial leverage (DFL) at the production level of 60,000 units. Discuss the implication of your answers. 5. Assume that the basic cost structure will apply if the production increase to 80,000 units. Calculate the degree of operating leverage (DOL), Degree of Financial Leverage (DFL) and degree of Total leverage (DTL). Which cost structure would you recommend they select? Explain. 6. At what production level would EPL be indifferent to the cost structure selected?