Sales (400,000 units at $35) . . . . . . . . 14,000,000

Less: Variable Costs (400,000 units at $10) . . . 4,000,000

Contribution 10,000,000

Fixed Costs . . . . . . . . . . . . . . . 2,000,000

Earnings Before Interest and Taxes . . . . . . . . 8,000,000

Interest Expense . . . . . . . . . . . . . . . . . . . . . . 1,000,000

Earnings Before Taxes (EBT) . . .. . . . . . . . 7,000,000

Income Tax Expense (Including State taxes, 30%) ..2,100,000

Given this income statement, compute the following:

1. Degree of Operating Leverage.

2. Degree of Financial Leverage.

3. Degree of Combined Leverage.

4. Break-Even point in units and dollars.