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The Sterling Tire Company's Income statement for 2 0 XX is as follo STERLING TIRE COMPANY Income Statement Year ended December 3 1 , 2

The Sterling Tire Company's Income statement for 20XX is as follo STERLING TIRE COMPANY Income Statement Year ended December 31,20XX Sales (60,000 tires at $75 each) Less: Variable costs (60,000 tires at $50) Contribution margin Less: Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT ) Income tax expense (30%) Earnings after taxes (EAT) Given this income statement , compute the following : Degree of operating leverage .(Round the final answer to 2 deci DOL b. Degree of financial leverage .( Round the final answer to 2 decin- DFL -1. Degree of combined leverage .(Do not round the intermediate2. Using your answers to aand b. calculate the percentage increase in EBIT and EBT from a 20 percent increase in sales volume. (Do not round the intermediate calculations. Round the final answers to 2 decimal places.) EBIT EBT -3. Does financial or operating leverage have the greater impact? DFL DOL d . Break-even point in units(Round the final answer to the nearest whole number.) Break-even pointtires e . Break-even point considering the interest expense as a fixed cost Break-even point tires
Fixed cost is 1250000

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