Calculate degree of operating leverage-financial leverage

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Reference no: EM131072799

Use at least 4 decimal places in all calculations.

Research Labs plans to sell 250,000 units at a price of $88 per unit. The variable cost per unit is $60. Fixed costs are $2,000,000. Unlimited has $4,200,000 of debt outstanding with a cost of 5%. The tax rate is 40%.

1. Calculate degree of operating leverage.

2. Calculate degree of financial leverage.

3. Calculate degree of combined leverage.

4. Calculate break-even.

5. If sales decrease by 5%, what will happen to Research Labs' earnings before taxes (EBT)?

Reference no: EM131072799

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