Homework Answers
Solution :-
(a) Earning before Interest & Taxes for sales of 12000 Units
| Particular | 12000 Units |
| Sales (Selling price per Unit * Units Sold) | 104,520 |
| Less: Variable Cost (Variable operating cost per unit * Units Sold) | 51,480 |
| Total Contribution | 53,040 |
| Less : Fixed operating cost | 19,700 |
| Earnings before Interest & Taxes (EBIT) | 33,340 |
(b) Earning before Interest & Taxes for sales of 9000 Units & 15000 Units
| Particular | 9000 Units | 15000 Units |
| Sales (Selling price per Unit * Units Sold) | 78,390 | 130,650 |
| Less: Variable Cost (Variable operating cost per unit * Units Sold) | 38,610 | 64,350 |
| Total Contribution | 39,780 | 66,300 |
| Less : Fixed operating cost | 19,700 | 19,700 |
| Earnings before Interest & Taxes (EBIT) | 20,080 | 46,600 |
(c) Calculate Percentage changes in Sales & Changes in EBIT
| Particular | 9000 Units | 12000 Units | 15000 Units |
| Sales (Selling price per Unit * Units Sold) | 78,390 | 104,520 | 130,650 |
| Less: Variable Cost (Variable operating cost per unit * Units Sold) | 38,610 | 51,480 | 64,350 |
| Total Contribution | 39,780 | 53,040 | 66,300 |
| Less : Fixed operating cost | 19,700 | 19,700 | 19,700 |
| Earnings before Interest & Taxes (EBIT) | 20,080 | 33,340 | 46,600 |
| Percentage change in Sales | 25.00% | 25.00% | |
| Percentage change in EBIT | 39.77% | 39.77% |
(d) Senstivity of Changes in EBIT in Response to Changes in Sales
Senstivity = Changes in EBIT / Changes in Sales
Senstivity = 39.77% / 25%
Senstivity = 1.5908%
It Means that for every 1% Change in sales , the EBIT will change by 1.5908%
Add Answer to:
EBIT Sensitivity Stewart Industries sells its finished product for $8.71 per unit. Its fixed operating costs...
EBIT Sensitivity Stewart Industries sells its finished product for $9.46 per unit. Its fixed operating costs...
EBIT Sensitivity Stewart Industries sells its finished product for $9.46 per unit. Its fixed operating costs are $20, 100, and the variable operating cost per unit is $4.79. a. Calculate the firm's earnings before interest and taxes (EBIT) for sales of 12,000 units. b. Calculate the firm's EBIT for sales of 11,000 and 13,000 units, respectively. c. Calculate the percentage changes in sales (from the 12,000-unit base level) and associated percentage changes in EBIT for the shifts in sales indicated...
Degree of operating leverage Grey Products has fixed operating costs of $389,000, variable operating costs of...
Degree of operating leverage Grey Products has fixed operating costs of $389,000, variable operating costs of $16.19 per unit, and a selling price of $63.43 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 10,000, 12,000, and 14,000 units, respectively. c. With 12,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of...
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of $16.55 per unit, and a selling price of $63.45 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 11,000, 13,000, and 15,000 units, respectively. c. With 13,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
Levin corporation has fixed operating costs of $72,000, variable operating cost of $6.75 per unit, and...
Levin corporation has fixed operating costs of $72,000, variable operating cost of $6.75 per unit, and selling price of $9.75 per unit. (A) Calculate the operating breakeven point in units. (B) Suppose the level of sales in 2017 is 250,000. What is the percentage change in EBIT if the level of sales in 2018 increases by 10%? (Calculate DOL first)
Cantor Products sells a product for $86. Variable costs per unit are $46, and monthly fixed...
Cantor Products sells a product for $86. Variable costs per unit are $46, and monthly fixed costs are $120,000. a. What is the break-even point in units? Break-Even Point 2,609 units b. What unit sales would be required to earn a target profit of $328,000? Total Required Sales units c. Assume they achieve the level of sales required in part b, what is the degree of operating leverage? (Round your answer to 3 decimal places.) Degree of Operating Leverage d....
7Next period a firm's variable cost per unit is $13.5, total fixed costs are $11649.9, and...
7Next period a firm's variable cost per unit is $13.5, total fixed costs are $11649.9, and sales price per unit is $25.26. If 1459 units are produced and sold next period lot complete Marked out ofwhat is the fim's operating profit on those sales? .00 Flag question Answer: Check Question 8 Next period a firm's variable cost per unit is $11.6, total fixed costs are $11184.9, Not completeand sales price per unit is $26.57 What is the firm's operating break-even?...
Debt and financial risk Tower Interiors has made the forecast of sales shown in the following...
Debt and financial risk Tower Interiors has made the forecast of sales shown in the following table. Also given is the probability of each level of sales. Sales Probability $190,000 0.25 290,000 0.55 390,000 0.20 The firm has fixed operating costs of 575,000 and variable operating costs equal to 60% of the sales level. The company pays 511,400 in interest per period. The tax rate is 40% a. Compute the earnings before interest and taxes (EBIT) for each level of...
problem:- Case 1 - Sales = 40,000 units; Selling price per unit = $5.0; Fixed operating...
problem:- Case 1 - Sales = 40,000 units; Selling price per unit = $5.0; Fixed operating costs = $40,000.0; Unit variable cost = 40.0% of Selling price; Interest expense = $10,000.0; Taxes = 30.0%; No. of Common stock shares = 10,000.0 shares. Case 2 - Sales = 60,000.0 units. Case 3 - Sales = 20,000.0 units. a) In case 1, what is your EBIT? EPS? b) In case 3, what is the change in sales? EPS? c) In case 2,...
Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00...
Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00 180.00 2,400.00 500.00 0.25 units Price Variable Cost Fixed Costs Interest Expense Tax Rate 2,000.00 8.00 4.50 2,400.00 500.00 0.25 Sales 200 units at 300 dollars Less Variable Costs (180 at 200 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 60,000.00 36,000.00 2,400.00 21,600.00 500.00 21,100.00 5,275.00 15,825.00 Sales 2000...
Bonita Industries sells its product for $7100 per unit. Variable costs per unit are: manufacturing, $3000,...
Bonita Industries sells its product for $7100 per unit. Variable costs per unit are: manufacturing, $3000, and selling and administrative, $100. Fixed costs are: $18000 manufacturing overhead, and $24000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015–2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. Income under absorption costing for 2016 is
EBIT Sensitivity Stewart Industries sells its finished product for $9.46 per unit. Its fixed operating costs are $20, 100, and the variable operating cost per unit is $4.79. a. Calculate the firm's earnings before interest and taxes (EBIT) for sales of 12,000 units. b. Calculate the firm's EBIT for sales of 11,000 and 13,000 units, respectively. c. Calculate the percentage changes in sales (from the 12,000-unit base level) and associated percentage changes in EBIT for the shifts in sales indicated...
Degree of operating leverage Grey Products has fixed operating costs of $389,000, variable operating costs of $16.19 per unit, and a selling price of $63.43 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 10,000, 12,000, and 14,000 units, respectively. c. With 12,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
Degree of operating leverage Grey Products has fixed operating costs of $373,000, variable operating costs of $16.55 per unit, and a selling price of $63.45 per unit. a. Calculate the operating breakeven point in units. b. Calculate the firm's EBIT at 11,000, 13,000, and 15,000 units, respectively. c. With 13,000 units as a base, what are the percentage changes in units sold and EBIT as sales move from the base to the other sales levels used in part (b)? d....
Cantor Products sells a product for $86. Variable costs per unit are $46, and monthly fixed costs are $120,000. a. What is the break-even point in units? Break-Even Point 2,609 units b. What unit sales would be required to earn a target profit of $328,000? Total Required Sales units c. Assume they achieve the level of sales required in part b, what is the degree of operating leverage? (Round your answer to 3 decimal places.) Degree of Operating Leverage d....
7Next period a firm's variable cost per unit is $13.5, total fixed costs are $11649.9, and sales price per unit is $25.26. If 1459 units are produced and sold next period lot complete Marked out ofwhat is the fim's operating profit on those sales? .00 Flag question Answer: Check Question 8 Next period a firm's variable cost per unit is $11.6, total fixed costs are $11184.9, Not completeand sales price per unit is $26.57 What is the firm's operating break-even?...
Debt and financial risk Tower Interiors has made the forecast of sales shown in the following table. Also given is the probability of each level of sales. Sales Probability $190,000 0.25 290,000 0.55 390,000 0.20 The firm has fixed operating costs of 575,000 and variable operating costs equal to 60% of the sales level. The company pays 511,400 in interest per period. The tax rate is 40% a. Compute the earnings before interest and taxes (EBIT) for each level of...
Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00 180.00 2,400.00 500.00 0.25 units Price Variable Cost Fixed Costs Interest Expense Tax Rate 2,000.00 8.00 4.50 2,400.00 500.00 0.25 Sales 200 units at 300 dollars Less Variable Costs (180 at 200 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 60,000.00 36,000.00 2,400.00 21,600.00 500.00 21,100.00 5,275.00 15,825.00 Sales 2000...
Most questions answered within 3 hours.
-
Atmospheric Mass
Venus and Earth have about the same mass and radius, but the
atmospheric pressure...
asked 28 minutes ago -
5. Discuss the use of fault tree analysis (FTA) for risk
assessment (maximum one paragraph).
asked 1 hour ago -
Given that a sample of aluminium oxide has a Young's modulus of
393 GPa and a...
asked 3 hours ago -
At a certain temperature, the equilibrium constant, Kc, for this
reaction is 53.3.
H2(g)+I2(g)−⇀↽−2HI(g)Kc=53.3
At this...
asked 4 hours ago -
Question1 ) The STL provides similiar classes called stack and
queue, both of which gave functions...
asked 5 hours ago -
For Questions 1-4, assume you have 5 bits available:
1. For (positive) integers: What is the...
asked 5 hours ago -
convert grams into vloume with the density of water being at
.997514 g/cm^3 at 23.1 Celsuis...
asked 7 hours ago -
Foreman company obtained a $20,000, 6% loan on May 1, 2018.
Principal and interest will be...
asked 7 hours ago -
5. Problem 11.05 (Discounted Payback)
eBook
Project L costs $60,000, its expected cash inflows are $14,000
per...
asked 8 hours ago -
1. Which of the following is true about politics and health
organizations?
A. Health organizations are...
asked 8 hours ago -
A space vehicle is coasting at a constant velocity of 18.1 m/s
in the +y direction...
asked 9 hours ago -
5) Use the following balanced equation to answer questions
(a)-(i).
3 Cu(s) + 8 HNO3(aq) →...
asked 9 hours ago