The Sterling Tire Company’s income statement for 2013 is as follows:

STERLING TIRE COMPANY

Income Statement

For the Year Ended December 31, 2013

Sales (20,000 tires at $60 each) ...........$1,200,000

Less: Variable costs (20,000 tires at $30) ...... 600,000

Fixed costs ................... 400,000

Earnings before interest and taxes (EBIT) ....... 200,000

Interest expense ................ 50,000

Earnings before taxes (EBT) ........... 150,000

Income tax expense (30%) ............. 45,000

Earnings after taxes (EAT) ............. $ 105,000

Given this income statement, compute the following:

a. Degree of operating leverage.

b. Degree of financial leverage.

c. Degree of combined leverage.

d. Break-even point in units.