CVP; operating leverage; income statement

Racine Tire Co$.$ manufactures tires for all$-$terrain vehicles. The tires sell for $$60,$ and variable cost per tire is $$30$; monthly fixed cost is $$990,000.$

a$.$ What is the break$-$even point in units and sales dollars?

Break$-$even point in units:

tires per month

Break$-$even in sales dollars: $

b$.$ If Ronnie Rice, the company's CEO, wants the business to earn a pre$-$tax profit of $25$ percent of revenues, how many tires must be sold each month?

units

c$.$ If the company is currently selling $44,000$ tires monthly, what is the degree of operating leverage?

d$.1.$ If the company can increase sales volume by $15$ percent above the current level, what will be the increase in net income? What will be the new net income?

New net income $

Increase in net income $

Prove your calculations with an income statement.

Note: Do not use negatives signs with your answers.

Racine Tire Co$.$

Income Statement

For the Month XXX