Sales CGS Year A $120,000 80,000 Year B $150,000 90,000 GP OPE 40,000 30,000 60,000 42,500 EBIT Interest 10,000 2,000 17,500 2,000 EBT Tax(40%) 8,000 3,200 15,500 6,200 NI $ 4,800 $ 9,300 Let TC (total op. cost) = CGS +OPE (operating cost). Then TC = Fixed + v*Sales Determine the parameters, fixed and v. [That is, estimate the underlying linear function] (4 marks) TC $110,000 $132,500 Sales 120,000 150,000 a. 14 marks Recast the year A 1/S into the contribution margin [CM] format. Suppose sales are expected to decline by 10% next year (Year A is the current year). (i) Calculate OLE and TLE for Year A, the current year. (ii) Using OLE, what NOPAT should the company expect next year? Using TLE, what NI should the company expect next year? (iii) Now prepare the I/S for next year using the CM format b. 12 marks Recast the year B I/S into the contribution margin [CM] format. Suppose sales are expected to increase by 10% next year (Year B is the current year). (i) Calculate OLE and TLE for Year B, the current year. (ii) Using OLE, what NOPAT should the company expect next year? Using TLE, what NI should the company expect next year? (iii) Now prepare the 1/S for next year using the CM format