In: Finance
(Break-even
analysis)
You have developed the income statement in the popup window,
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, for the Hugo Boss Corporation. It represents the most recent year's operations, which ended yesterday. 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 35 percent, by what percent would earnings before taxes (and net income) increase?
a. What is the firm's break-even point in sales dollars?
$26083606
(Round to the nearest dollar.)
b. If sales should increase by 35 percent, by what percent would earnings before taxes increase by _______ (Round to two decimal places.)
question b please!
Sales 50,803,627
Variable costs (21,878,000)
Revenue before fixed costs 28,925,627
Fixed costs (14,851,000)
EBIT 14,074,627
Interest expense (1,031,032)
Earnings before taxes 13,043,595
Taxes at 35% (4,565,258)
Net income ˜NI
I HAVE EXPLAINED ANSWER USING 2 DIFFERENT METHODS. BOTH ARE CORRECT. METHOD 2 IS MORE PREFERABLE AS IT IS APPLICATION OF COMBINED LEVERAGE