EBIT Sensitivity Stewart Industries sells its finished product for $8.47 per unit. Its fixed operating costs are $19,400 and the variable operating cost per unit is $5.81.
A. Calculate the firm's earnings before interest and taxes (EBIT) for sales of 9,000 units
B. Calculate the firms' EBIT for sales of 7,000 and 11000 units
C. Calculate the percentage changes in sales (from the 9,000 unit base level) and associated percentage changes in EBIT for the shifts in sales indicated in part B.
D. ON the basis of your findings in part c, comment on the sensitivity of changes in EBIT in response to changes in sales.