Explain what is the firm''s break-even point in sales dollars, Operation Management

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

 


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