Question 2 (12 marks) The following information was extracted from the Income Statement of Benguela Limited for 2020 financial year.

Income Statement for the year ended 31 December 2020 Sales (35 000 units at N$250) 8 750 000

Variable cost (35 000 at N$70) 2 450 000

Contribution 6 300 000

Fixed cost 3 000 000

Earnings before interest and tax 3 300 000

Interest expense 1 700 000

Earnings before tax 1 600 000

Taxation 480 000

Earnings after tax 1 120 000 Required: a) Calculate the degree of operating leverage. (3 marks)

b) Calculate the degree of financial leverage. (3 marks)

c) Calculate the degree of combined leverage. (4 marks)

d) Find the break-even point in units. (2 marks)