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Calculate the degree of operating leverage

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Reference no: EM133007456

Given the following information for Conserve Ltd. for the year 2020:

(000)

Sales (100,000 units) $2,000,000

Variable costs 1,400,000

Contributions margin $ 600,000

Fixed manufacturing costs 200,000

EBIT $ 400,000

Interest 100,000

EBT $ 300,000

Problem 1: Calculate the following:

A) The Degree of Operating Leverage (DOL)

B) The Degree of Financial Leverage (DFL)

C) Degree of Combined Leverage (DCL)

(D) If sales volume INCREASED by 30%, (1) What increase would CONSERVE Ltd. experience in EBIT in terms of a percentage?

Reference no: EM133007456

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