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QUESTION 2 ABC Toys manufacturers a special custom-made teddy bear. The annual sales are 250,000 teddy bears and the selling price is RM30 per teddy.

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QUESTION 2 ABC Toys manufacturers a special custom-made teddy bear. The annual sales are 250,000 teddy bears and the selling price is RM30 per teddy. The fixed operating costs are RM50,000 and variable costs are RM17.50 per unit. The company also pay interest on long term debt amounted RM55,000 annually. Currently, the total outstanding share is 50,000 shares and the tax rate are 30% Calculate: i) Breakeven quantity. (3 marks) i) Degree of operating leverage at base sales level. (4 marks ii) Degree of financial leverage at base sales level. (4 marks

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