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Calculate the degree of operating leverage

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Reference no: EM133173279

Question - The following information pertains to Rose Berhad:

Selling price per unit: RM290

Variable cost per unit: RM100

Fixed cost per year: RM300,000

Debt financing: RM500,000 at 12%interest

Number of shares: 500,000 shares

Tax rate: 24%

Required - At a sales level of 40000 units:

1. Calculate the break-even point (SEP) in Ringgit.

2. Calculate the degree of operating leverage (DOL), degree of financial leverage (DFL) and degree of total leverage (DTL).

3. Referring to your answer in (b) show the effect on the earnings per share (EPS) if: a) Sales increase by 30% b) Sales decrease by 20%.

Reference no: EM133173279

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