Problem:
A company reports that if its sales are $80,000, EBIT =$8,000, net income = $2400, DOL is 2.5 and DFL is 2.0.
Required:
Question 1: What is the company's fixed operating costs?
Question 2: What will the company's net income be if sales turn out to be $88,000 rather than $80,000?
Note: Provide support for rationale.