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  3. (b) tsc chocolate manufacturing sdn. bhd. produces

(b) TSC Chocolate Manufacturing Sdn. Bhd. produces quality chocolate that wholesales for RM8.00. Each packet...

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Accounting

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(b) TSC Chocolate Manufacturing Sdn. Bhd. produces quality chocolate that wholesales for RM8.00. Each packet of chocolate has variable operating costs of RM5.50. Fixed operating costs are RM20,000 per year. The firm pays RM13,000 interest and preferred dividends of RM 7,000 per year. At this point, the firm is selling 30,000 packets of chocolates per year and is taxed at a rate of 26%. Required: (i) Calculate TSC Chocolate Manufacturing Sdn. Bhd. operating breakeven point. (2 marks) (ii) On the basis of the firm's current sales of 30,000 units per year and its interest and preferred dividend costs, calculate its Earnings Before Interest and Tax (EBIT) and earnings available for common stockholders. (9 marks) (iii) Calculate the firm's degree of operating leverage (DOL). (2 marks) (iv) Calculate the firm's degree of financial leverage (DFL). (2 marks) (v) Calculate the firm's degree of total leverage (DTL). (2 marks) [Total: 25 Marks]

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