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In: Finance

(​Break-even analysis​) You have developed the income statement in the popup​ window, LOADING... ​, for the...

(​Break-even

analysis​)

You have developed the income statement in the popup​ window,

LOADING...

​, 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

Solutions

Expert Solution

I HAVE EXPLAINED ANSWER USING 2 DIFFERENT METHODS. BOTH ARE CORRECT. METHOD 2 IS MORE PREFERABLE AS IT IS APPLICATION OF COMBINED LEVERAGE

jeff jeffy answered 6 months ago
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