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 cost (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 50% (6,835,500)
Net income $6,835,500
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%, by what percent would earnings before taxes (and net income) increase?