Friendly Pie Inc., income statement for 2015 is as follows:

FRIENDLY PIE, INC.

Income Statement

For the Year Ended December 31, 2015

Sales (50,000 units at $60) . . . . . . . . . $3,000,000

Less: Variable costs (50,000 units at $20) . ... .1,000,000

Fixed costs . . . . . . . . . . . . . . . 500,000

Earnings before interest and taxes . . . . . . . 1,500,000

Interest expense . . . . . . . . . . . . . . . . . . . . . . 300,000

Earnings before taxes (EBT) . . .. . . . . . . . 1,200,000

Income tax expense (40%) . . . . . . . . . . .. 480,000

Earnings after taxes (EAT) . . . . . . . . . .. $720,000

Given this income statement, compute the following:

A. Degree of operating leverage. (1 point)

B. Degree of financial leverage. (1 point)

C. Degree of combined leverage. (1 point)