Question A

The following data is available for firm A

Firm A

Quantity 20,000 units

Selling Price KShs 20

Variable Cost KShs 15

Fixed Cost KShs 40,000

Interest KShs 10,000

Preferred Dividend KShs 5,000

Tax rate 30%

Required: (8Marks)

i. Overall break – even point in units.

ii. Degree of operating leverage.

iii. Degree of financial leverage.

iv. Degree of total leverage.​