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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
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) Less: Variable costs (30,000 units at $7) Contribution margin Less: Fixed costs Operating profit or (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense (25%) Earnings after taxes (EAT) $ 750,000 210,000 540,000 270,000 270,000 170,000 100,000 25,000 $ 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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