Given the following data for the Vitale Iron Company:

EBIT = $60,000

Sales = 25,000 units

Sales Price per Unit = $9.00

Fixed Operating Cost = $65,000

Required: A. Calculate the operating breakeven point in units

B. Calculate the degree of operating leverage (hint: DOL = % D in EBIT e.g. increase base

% D in sales sales units 100%)

If the degree of operating leverage is 2 and the degree of financial leverage is 4, what is

the degree of total leverage?

A. (hint: Sales VC FC = EBIT)

B. base units

25,000 units 50,000 units

Sales

- VC

- FC

_____ ________ ________

EBIT

DOL = % ^ in EBIT

% ^ in sales