Can you please explain how/where they are getting the $7,000 and $8,000? I cant figure it out. Thank you.

Right. This is one of those problems reminiscent of 8 th grade algebra. We know that income tax is 50% of pretax income; therefore, pretax income is $7,000. Operating income or earnings before interest and taxes is $8,000. The difference between gross margin and EBIT is $30,000. Click next to continue