3.[EXCEL] EBIT: The Generic Publications Textbook Company sells all of its books for $100 per book, and it currently costs $50 in variable costs to produce each text. The fixed costs, which include depreciation and amortization for the firm, are currently $2 million per year. Management is considering changing the firm's production technology, which will increase the fixed costs for the firm by 50 percent but decrease the variable costs per unit by 50 percent. If management expects to sell 45,000 books next year, should they switch technologies?

4.[EXCEL]EBIT: WalkAbout Kangaroo Shoe Stores management forecasts that it will sell 9,500 pairs of shoes next year. The firm buys its shoes for $50 per pair from the wholesaler and sells them for $75 per pair. If the firm will incur fixed costs plus depreciation and amortization of $100,000, then what is the percent increase in EBIT if the actual sales next year equal 11,500 pairs of shoes instead of 9,500?

5.[EXCEL]Cash Flow DOL: The law firm of Dewey, Cheatem, and Howe has monthly fixed costs of $100,000, EBIT of $250,000, and depreciation charges on its office furniture and computers of $5,000. Calculate the Cash Flow DOL for this firm.

6.[EXCEL]Cash Flow DOL: The degree of pretax cash flow operating leverage at Rackit Corporation is 2.7 when it sells 100,000 units of its new tennis racket and its EBITDA is $95,000. Ignoring the effects of taxes, what are the fixed costs for Rackit Corporation?

10.[EXCEL]Break-even analysis: Calculate the accounting operating profit break-even point and pretax operating cash flow break-even point for each of the three production choices outlined below.

choice price unit vc fc d&a

a $250 $160b $15000 $3000

B $55 $10 $1100 $200

C $10 $1.50 $100 $100