(Leverage analysis) You have developed the following income statement 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:

What is the firm's break-even point in sales dollars?

If sales should increase by 30 percent, by what percentage would earnings before taxes (and not income) increase?

(a) What is the firm's break-even point in sales dollars?
(b) If sales should increase by 30 percent, by what percentage would earnings before taxes (and not income)increase?

Sales Variable costs Revenue before fixed costs Fixed costs EBIT Interest expense Earnings before taxes Taxes at 50% Net Income S 50,439,375 S(25,137,000) S 25,302,375 S (10,143,000) S 15,159,375 S (1,488,375) S 13,671,000 (6.835.500) 6,835,000 100% -50% 50% 20% 30% -3% 27% -14% 14%