Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows:

Sinclair Boswell

Capital Structure

Debt @ 10% $ 840,000 0

Common stock, $10 per share 560,000 $ 1,400,000

Total $ 1,400,000 $ 1,400,000

Common shares 56,000 140,000

Operating Plan:

Sales (54,000 units at $15 each) $ 810,000 $ 810,000

Variable costs 648,000 324,000

Fixed costs 0 304,000

Earnings before interest and taxes (EBIT) $ 162,000 $ 182,000

The variable costs for Sinclair are $12 per unit compared to $6 per unit for Boswell.

a.If you combine Sinclairs capital structure with Boswells operating plan, what is the degree of combined leverage? (Round your answer to 2 decimal places.)

Degree of combined leverage

b.If you combine Boswells capital structure with Sinclairs operating plan, what is the degree of combined leverage? (Round your answer to the nearest whole number.)

Degree of combined leverage

c.In part b, if sales double, by what percentage will EPS increase? (Round your answer to the nearest whole percent.)

EPS will increase by %