Camping USA Inc. has been operating for only 2 years in the outskirts of Albuquerque, New Mexico,
Question:
To make the required calculations, you have put together the following data regarding the cost structure of the company:
The CFO has instructed you to first determine the break-even point in units of output for the company. He requires that you prepare supporting documents, which demonstrate how you arrived at your conclusion and can facilitate his review of your work. Accordingly, you are required to have the information needed to prepare an analytical income statement for the company to be presented to the CFO. In a format that is acceptable for a meeting discussion with the CEO, you also need to prepare answers to the following questions:
a. What is the firm’s break- even point in sales dollars?
b. If sales should increase by 40 percent, by what percentage would EBT (earnings before taxes) and net income increase?
c. Prepare another income statement, this time to verify the calculations from part (b).
Step by Step Answer:
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty