JACKSONS BOX MANUFACTURING CO.

INCOME STATEMENT

For the Year Ended December 31, 2019

Sales (20,000 boxes at $60/ea.)..$1,200,000

Less: Variable Cost (20,000 boxes @30/ea).$ 600,000

Fixed Costs.$ 400,000

Earnings before interest and taxes (EBIT).$ 200,000

Interest Expense..$ 50,000

Earnings before taxes (EBT)..$ 150,000

Income tax expense (30%).$ 45,000

Earnings after taxes (EAT)$ 105,000

a. Calculate the Break-even points in units and dollar Sales. (show graphically)

b. Calculate the Degree of operating Leverage (DOL)

c. Calculate the Degree of Financial Leverage (DFL)