Use the information below to complete your assignment. Fly Away Corporation makes pumps for the aviation industry. The income statement is shown below: Fly Away Corporation Sales (7,000 pumps at $40) $280,000 Less: Variable costs (7,000 pumps at $15) $105,000 Fixed Costs $50,000 Earnings before interest and taxes (EBIT) $125,000 Interest $12,000. Fly Away has a tax rate of 25%, and a preferred dividend of $6,000. Use the information from the income statement to compute the following:

1. Degree of operating leverage.
2. Degree of financial leverage.
3. Degree of combined leverage.
4. The break-even point.
5. Explain the difference between the two types of leverage.
6. Re-compute with the fixed costs increased to $60,000 and explain what happened to the break-even point.