Break-even analysis)

You have developed the income statement in the popup window, for the Hugo Boss Corporation. It represents the most recent year's operations, which ended yesterday. Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the followingquestions:

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

b. If sales should increase by 30 percent, by what percent would earnings before taxes (and net income) increase?

Sales $50,274,787

Variable costs (28,201,000)

Revenue before fixed costs $22,073,787

Fixed costs (13,922,000)

EBIT $8,151,787

Interest expense (1,650,628)

Earnings before taxes $6,501,159

Taxes at 30% (1,950,348)

Net income $4,550,811