To produce chewing gum, DryFruit Gum Company pays $100,000 per year for rent on a long-term lease and $25 per kilogram for sorbitol and other ingredients.These are the only costs associated with making DryFruit Gum.During the year, the firm sold 30,000 kilograms of chewing gum at $45 per kilogram.Ignoring income taxes, the degree of total leverage (DTL)for DryFruit is:

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The degree of total leverage (DTL) is calculated as the percentage change in net income divided by the percentage change in sales. The formula for DTL is: DTL = (Sales - Variable Costs) / (Sales - Variable Costs - Fixed Costs). Here, Sales = 30,000 kg * $45 = $1,350,000, Variable Costs = 30,000 kg * $25 = $750,000, and Fixed Costs = $100,000. Therefore, DTL = ($1,350,000 - $750,000) / ($1,350,000 - $750,000 - $100,000) = $600,000 / $500,000 = 1.20.

To Produce Chewing Gum, DryFruit Gum Company Pays $100,000 Per