Homework Answers
| Part a | ||
| Sales | 6,00,000 | |
| Variable cost | 3,00,000 | |
| Variable cost as % of sales | 50.0% | |
| Total contribution margin | 3,00,000 | |
| Fixed costs | 1,00,000 | |
| EBIT | 2,00,000 | |
| Interest expense | 50,000 | |
| Earnings before taxes | 1,50,000 | |
| Taxes (30%) | 45,000 | |
| Net Income | 1,05,000 | |
| EPS (Net income / Shares outstanding) | 11 | |
| If sales increased by 10% | ||
| Sales | 6,60,000 | |
| Variable cost | 3,30,000 | |
| Total contribution margin | 3,30,000 | |
| Fixed costs | 1,00,000 | |
| EBIT | 2,30,000 | |
| Interest expense | 50,000 | |
| Earnings before taxes | 1,80,000 | |
| Taxes (30%) | 54,000 | |
| Net Income | 1,26,000 | |
| New EPS (Net income / Shares outstanding) | 13 | |
| Part a | ||
| Current | With 10% sales growth | |
| Sales | 6,00,000 | 6,60,000 |
| % Change | 10.0% | |
| Net Income | 11 | 13 |
| % Change | 20.0% |
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