Operating and Financial Leverages. John Tripper Soft Drinks, Inc., sells 500,000 bottles of soft drinks a year. Each bottle produced has a variable cost of $0.25 and sells for $0.45. Fixed operating...

Operating and Financial Leverages. John Tripper Soft Drinks, Inc., sells 500,000 bottles of soft drinks a year. Each bottle produced has a variable cost of $0.25 and sells for $0.45. Fixed operating costs are $50,000. The company has current interest charges of $6,000 and preferred dividends of $2,400. The corporate tax rate is 40 percent.

                (a) Calculate the degree of operating leverage, the degree of financial leverage, and the degree of total leverage. (b) Do part (a) at the 750,000 bottle sales level. (c) What generalizations can you make comparing (a) to (b) after first finding the break-even point?