The Harding Company manufactures skates. The companies income statement for 2013 is as follows:

Harding Company

Income Statement

For the year ended December 31, 2013

Sales (10,500 skates @ $60 each) 630,000 Less: Variable costs (10,500 stakes at $25) 262,500 Fixed costs 200,000 Earnings before interest and taxes (EBIT) 167,500 Interest expense 62,500 Earnings before taxes (EBT) 105,000 Income tax expense (30%) 31,500 Earnings after taxes (EAT) 73,500 n/a n/a

Given the income statement, compute the following:

a. Degree of operating leverage.

b. Degree of financial leverage.

c. Degree of combined leverage.

d. Break-even point in units (number of skates).