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Freudian Slips and Gowns, Inc. s income statement for 2 0 XX is as follows: FREUDIAN SLIPS AND GOWNS Income Statement Year ended December 3

Freudian Slips and Gowns, Inc.s income statement for 20XX is as follows: FREUDIAN SLIPS AND GOWNS Income Statement Year ended December 31,20XX Sales (30,000 units at $25) $ 750,000 Less: Variable costs (30,000 units at $7)210,000 Contribution margin 540,000 Less: Fixed costs 270,000 Operating profit or (EBIT)270,000 Interest expense 170,000 Earnings before taxes (EBT)100,000 Income tax expense (25%)25,000 Earnings after taxes (EAT) $ 75,000 Given this income statement, compute the following: a. Degree of operating leverage. DOL b. Degree of financial leverage. (Round the final answer to 1 decimal place.) DFL c-1. Degree of combined leverage. (Do not round the intermediate calculations. Round the final answer to 1 decimal place.) DCL

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