Read and understand the following question and answer carefully step by step

Jack Jan Enterprise is considering the needs of restructuring their capital structure. For the first phase, they are evaluating two different operating structures that are described below. The firm has annual interest expense of $250, common shares outstanding of 1,000 unit, and a tax rate of 40 percent.

	Fixed costs	Price per unit	Variable cost per unit
Operating structure 1	$1000	$1	$0.80
Operating structure 2	$1500	$1	$0.70

For each operating structure, calculate:

a) EBIT and EPS at 20,000 units.

b) The degree of operating leverage (DOL) and degree of total leverage (DTL) using 20,000 units as a base sales level.

c) The operating breakeven point in units.

d) If Jack Jan projects sales of 20,000 units, which operating structure is recommended?