You have developed the following income statement for the Hugo Boss Corporation. It represents the most recent

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You have developed the following income statement for the Hugo Boss Corporation. It represents the most recent year’s operations, which ended yesterday.

Sales ………………………………………………………….          $ 50,439,375

Variable costs …………………………………………….           (25,137,000)

Revenue before fixed costs……………………….            $25,302,375

Fixed costs …………………………………………………          (10,143,000)

EBIT …………………………………………………………..          $15,159,375

Interest expense ……………………………………….            (1,488,375)

Earnings before taxes ………………………………           $13,671,000

Taxes at 21% ……………………………………………              (2,870,910)

Net income ……………………………………………..            $10,800,090

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 30 percent, by what percent would earnings before taxes (and net income) increase?

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Foundations Of Finance

ISBN: 9780135160619

10th Edition

Authors: Arthur J. Keown, John H. Martin, J. William Petty

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