a. Before you can compute the firm's break-even point in sales dollars, you need to compute some items on the firm's income statement.

The firm's operating assets are

$6,000,000

and the operating asset turnover is

18

times. What are the firm's sales revenues?

$nothing

(Round to the nearest dollar.)The firm's operating assets are

$6,000,000

and the return on operating assets is

46%.

What is the firm's EBIT?

$nothing

(Round to the nearest dollar.)Given the degree of operating leverage of

11

times the sales and EBIT computed in previous steps, what are the firm's total variable costs?

$nothing

(Round to the nearest dollar.)

Based on the computed sales, EBIT, and variable costs, what are the firm's total fixed costs?

$nothing

(Round to the nearest dollar.)

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

	Sales revenues	$108,000,000
	Less: Variable costs	77,640,000
	Less: Fixed costs	27,600,000
	Equals: EBIT	$2,760,000
	Less: Interest expense	720,000
	Equals: EBT
	Less: Taxes (26%)
	Equals: Net income

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

$nothing

(Round to the nearest dollar.)b. If sales should increase by

20

percent (as the president expects), by what percentage would EBT (earnings before taxes) and net income increase?

nothing%

(Round to the nearest whole percent.)c. Prepare another income statement to verify the calculations from part

b.

If sales should increase by

20

percent, what will the forecast level of sales revenues be?

$nothing

(Round to the nearest dollar.)Since variable costs will also increase by

20

percent, what is the forecast level of variable costs?

$nothing

(Round to the nearest dollar.)

Complete the following income statement after the increase in sales.(Round up all items to the nearest dollar.)

	Sales revenues	$129,600,000
	Less: Variable costs	93,168,000
	Less: Fixed costs	27,600,000
	Equals: EBIT
	Less: Interest expense	720,000
	Equals: EBT
	Less: Taxes (26%)
	Equals: Net income

Using the EBT from the two income statements, what is the percentage change in the EBT?

nothing%

(Round to the nearest whole percent.)

Camping USA Inc. has been operating for only 2 years in the outskirts of Albuquerque, New Mexico, and is a new manufacturer of a top-of-the-line camping tent. You are starting an internship as assistant to the chief financial officer of the company, and the owner and CEO, Tom Charles, has decided that this is the right time to know more about the business and financial risks his company must deal with. For this, the CFO has asked you to prepare an analysis to support him in his next meeting with Tom Charles week from today. To make the required calculations, you have put together the following data regarding the cost structure of the company in the popup window, The CFO has instructed you to first determine the break-even point in units of output for the company. He requires that you prepare supporting documents that demonstrate how you arrived at your conclusion and can facilitate his review of your work. Accordingly, you are required to have the information needed to prepare a pro forma income statement for the company to be presented to the CFO. In a format that is acceptable for a meeting discussion with the CEO, you also need to prepare answers to the following questions: a. What is the firm's break-even point in sales dollars? b. If sales should increase by 20 percent, by what percentage would EBT (earnings before taxes) and net income increase? c. Prepare another income statement, this time to verify the calculations from part b