What is the DCL of Strawberry, Inc. at the initial sales level of 300,000 units before the expansion of the R&D?

Using the values we found previously,

DCL = DOL*DFL = 6*1.923 = 11.54

or, (Sales VC)/(EBIT Interest) = 90,000,000/7,800,000 = 11.54

Interpretation: For a 1% change in sales (from the initial level of 300,000 units @ $350/unit), net income (NI) or, on a per-share basis, earnings per share (EPS), will change by 11.54%.

The figure below demonstrates the effect of the initial 10% increase in sales on both EBIT and EPS for Strawberry, Inc. before the R&D expansion.

What is the percentage change in EPS for Strawberry, Inc (before the R&D expansion) if sales fall by 2.8%? Round to 0.01%, drop the % symbol, do not ignore the negative sign.

115.4% 60% 10% Sales Op. Income (EBIT) EPS Operating leverage DOL = 6.00 Financial Leverage DFL = 1.923