"Eastman Kodak Company is a provider of imaging technology products and services to the photographic, graphic communications, and health-care markets. A condensed 2011 income statement follows (in millions):

Sales

$6,022

Cost of goods sold

5,135

Gross margin

887

Other operating expenses

1,487

Loss from continuing operations

$ (600)

Assume that $1,400 million of the cost of goods sold is a fixed cost representing depreciation and other production costs that do not change with the volume of production. In addition, $1,000 million of the other operating expenses is fixed."

Question:

1. Suppose that sales for Eastman Kodak are predicted to increase by 10% and that the cost behavior is expected to continue. Compute the predicted operating income (loss).
2. What assumptions were necessary to compute the predicted operating income