FINANCE
12.1 You have developed the following income statement for the Hugo Boss Corporation. It represents the most recent year's operations, which ended yesterday.
Sales. $50,439,375
Variable costs. (25,4137,000)
Revenue before fixed costs. $25,302,375
Fixed costs. (10,143,000)
EBIT $15,159,375
Interest expense. (1,488,375)
Earnings before taxes. $13,671,000
Taxes at 50%. (6,835,500)
Net income. $6,835,500
Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions:
a. What is the firm's break-even point in sales dollars?
b. If sales should increase by 30 percent, by what percent would earnings before taxes (and net income) increase?
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