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Question 1 The following information pertains to Premier Berhad: Selling price per unit : RM180 Variable cost per unit : RM80 Fixed cost per year
Question 1 The following information pertains to Premier Berhad: Selling price per unit : RM180 Variable cost per unit : RM80 Fixed cost per year : RM400,000 Debt financing : RM800,000 at 10% interest Number of shares : 400,000 shares Tax rate : 24% Required: At a sales level of 100,000 units: a. Calculate the break-even point in Ringgit. (2 Marks) b. Calculate the degree of operating leverage (DOL), degree of financial leverage (DFL) and degree of total leverage (DTL). (3 Marks) C. Referring to your answer in (b), show the effect on the earnings per share (EPS) if: i. Sales increase by 30% ii. Sales decrease by 20% (5 Marks) (Total: 10 Marks)
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