1. A firm sells their product for $6 and has variable costs of $4 per unit. Their fixed costs are $200,000 and their interest expense is $50,000. How many units must they sell in order to have income before taxes of $100,000?

a. 125,000      b. 150,000      c. 175,000      d. 200,000

2. A firm sells their product for $6 and has variable costs of $4 per unit. Their fixed costs are $200,000 and their interest expense is $50,000. What is their Degree of combined leverage if they sell 150,000 units?

a. 2                 b. 4                 c. 6                 d. 8

3. A firm sells their product for $6 and has variable costs of $4 per unit. Their fixed costs are $200,000 and their interest expense is $50,000. How many units must they sell in order to have a degree of operating leverage of 2?

a. 125,000      b. 150,000      c. 175,000      d. 200,000