(a)The W.V Scott Company had sales last year of $600,000, a NOI of $20,000 and DOL of 4. Assume that fixed costs are the same this year as last year.

(i)Suppose that next years sales are $630,000. What will next years NOI be?

(ii)Suppose that next years sales are $550,000. What will next years NOI be?

3. Next years NOI is $25,000. What must sales be for that year? (4 marks)

(b)Top pops manufactures plaid vinyl and cartops for convertibles. These roofs sells for $200 each and have an associated variable cost per unit of $120. Management fully expects next years sales and NOI to drop sharply, by 20% and 50%, respectively due to a lack of demand. If Top pops current level of production and sales is 112 cartops, what is its level of fixed costs?