13-26 (Integrated-multiple leverage measures) Play-More Toys produces inflatable beach balls, selling M 400000 balls a year. Each ball produced has a variable operating cost of $0.84 and sells for $1 Fixed operating costs are $28000. The firm has annual interest charges of $6000, preference share dividends of $2000 and a 30% tax rate. a Calculate the operating break-even point in units. b Use the DOL formula to calculate DOL. c Use the DFL formula to calculate DFL. d Use the degree of total leverage (DTL) formula to calculate DTL. Compare this to the product of DOL and DFL calculated in parts b and c
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