S ASDF Corporate Income Statement Current Year Units Sold 100,000 Unit Price $50.00 Sales Revenue $5,000,000 Variable Expenses (Materials & $1,500,000 Labor) Fixed Expenses (Marketing & $500,000 Overhead) Earnings Before Interest & Taxes $3,000,000 (EBIT) Paid Interest $200,000 Earnings Before Taxes (EBT) $1,800,000 $540,000 Taxes Net Income after Taxes (NIAT) $1,260,000 $260,000 Dividends $1,000,000 Retained Earnings 1. Calculate the number of units ASDF must sale to break even. That is calculate BE Unit Sales. 11 wers. 1. Calculate the number of units ASDF must sale to break even. That is calculate BE Unit Sales. (4 Points) BE Unit Sales - Total Fixed Costs Contribution Margin EC. (P. - VC) Where: ECE = Total fixed costs P. = Price per unit Cu = Variable cost per unit BE Unit Sales - 1 2. BE Unit Sales is where: Total Operating Costs (TC) - Total Revenue (TR). Show that this is the case for the BE Unit Sales you calculated above. (4 points) Total Operating costs at BE Unit Sales = Units x VCu + FC Total Revenue at BE Unit Sales = Units x Price Total Operating costs at BE Unit Sales = Units X VCu + FC Total Revenue at BE Unit Sales = Units x Price 3. Calculate the Degree of Operating Leverage (DOL) for ASDF. (4 points) (Sales - Variable Costs) EBIT Qx(P,- VC) Qx (Pu-CW) - FC DOL DOL