Integrative - Multiple measures Play-More Toys produces inflatable beach balls, selling 400,000 balls per year. Each ball produced has a variable operating cost of $0.82 and sells for $1.09. Fixed operating cost are $25,000. The firm has annual interest charges of $6,200, preferred dividend of $1,900 and a 21% tax rate.

a. Calculate the operating breakeven point in units.

b. Use the degree of operating leverage (DOL) formula to calculate DOL.

c. Use the degree of financial leverage (DFL) formula to calculate DFL.

d. Use the degree of total leverage (DTL) formula to calculate DTL. Compare this to the product of DOL and DFL in parts (b) and (c).

_______________________________________________________________________________________________

a. The operating breakeven point in units is _______ units. ( Round to the nearest integer.)

b. The degree of operating leverage is _______. ( Round to four decimal places.)

c. The degree of financial leverage is _______ . ( Round to four decimal places.)

d. The degree of total leverage is ________ . ( Round your answer to two decimal places.)

Compare this to the product of DOL and DFL calculated in parts (b0 and (c).

The degree of total leverage is ________ . ( Round your answer to two decimal places.)

The values for the degree of total leverage calculated above are (1) __________ . (Note: if the difference between the two calculated values above is 0.01 or less, these are considered as equal values.)

(1) ______ equal

______ different