Pinches Salt Company has the following income statement: (10 points) Sales $5,000,000 Variable Operating Cost 1,000,000 Fixed Operating Cost 2,000,000 EBIT $2,000,000 Interest 500,000 EBT $1,500,000 Tax (at 40%) 600,000 EAT $ 900,000 Preferred Dividends 100,000 Earnings available for CS $ 800,000 Shares Outstanding 400,000

a. Compute Pinches DOL, DFL, and DTL

b. If sales increase to $5,500,000, what is the forecast of the EPS. You need to make a new income statement to complete this problem.