Question

Compute the​ EBT, taxes, and net income to complete the following income statement.  ​(Round up all items to the nearest​ dollar.)  

	Sales revenues	$25,200,000
	Less: Variable costs	20,304,000
	Less: Fixed costs	3,672,000
	Equals: EBIT	$1,224,000
	Less: Interest expense	600,000
	Equals: EBT
	Less: Taxes (38%)
	Equals: Net income

What is the​ firm's break-even point in sales​ dollars?

​$nothing  

​(Round to the nearest​ dollar.)

Output level	78,000units
Operating assets	​$3,600,000
Operating asset turnover	7 times
Return on operating assets	34​%
Degree of operating leverage	4 times
Interest expense	​$600,000
Tax rate 38%

Answer 1

Sales revenue Less: Variable costs Less: Fixed costs EBIT Less: Interest expense EBT Less: Taxes (38%) Net income $ 25,200,000 $ 20,304,000 $ 3,672,000 $ 1,224,000 $ 600,000 624,000 237,120 $ 386,880 Contribution Margin Ratio = (Sales Revenue - Variable Costs) / Sales Revenue Contribution Margin Ratio = ($25,200,000 - $20,304,000) / $25,200,000 Contribution Margin Ratio = 19.4286% Breakeven Point in Sales Dollars = Fixed Costs / Contribution Margin Ratio Breakeven Point in Sales Dollars = $3,672,000 / 0.194286 Breakeven Point in Sales Dollars = $18,899,972