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:

Degree of operating leverage.

Degree of financial leverage.

Degree of combined leverage: Comment on the impact of a 30 percent increase in sales. Does financial or operating leverage have the greater impact?

Breakeven point in units.

Breakeven point considering the interest expense as a fixed cost.