Q3

(2 Mustafa Co. produces beach balls, selling 400,000 balls per year. Each ball produced has a variable operating cost of BD 0.84 and sells for BD 1.00. Fixed operating costs are BD 28,000. The firm has annual interest charges of BD 6,000; annual preferred dividends of BD 2,000 and a 40% tax rate. a) Calculate the operating breakeven point in units. marks) b) Calculate the degree of operating leverage. (3 marks) c) Calculate the degree of financial leverage. marks) d) Calculate the degree of total leverage. (2 marks)