Question: Use the information from the previous two problems Calculate BWP s breakeven

Use the information from the previous two problems. Calculate BWP’s breakeven point in units and dollars, with and without the purchase of the new machine.
Revenue ..............$10,000
Variable cost ............6,500
Fixed cost ..............2,200
EBIT $ ..............1,300
Interest (@ 10%) .............500
EBT $ ................800
Tax (@ 40%) ..............320
EAT $ ................480
Number of shares ...........20,000
a. What are Spitfire’s contribution margin and dollar breakeven point?
b. Calculate Spitfire’s current DFL, DOL, and DTL.
c. Calculate the current EPS and estimate what it would become if sales declined by 25%. Use the DTL first and then recalculate the modified income statement. (Assume a negative EBT generates a negative tax.)


View Solution:


Sale on SolutionInn
Sales1
Views225
Comments
  • CreatedSeptember 13, 2012
  • Files Included
Post your question
5000