Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Spitfire Model Airplane Company has the following modified income statement ($000) at 100,000 units of production. $15,000 5,500 Variable Cost Fixed Cost $1,300 Interest(@10%)
The Spitfire Model Airplane Company has the following modified income statement ($000) at 100,000 units of production. $15,000 5,500 Variable Cost Fixed Cost $1,300 Interest(@10%) Tax (@40%) Number of shares a. What are Spitfire's contribution margin and dollar breakeven point? Enter your contribution in decimals and not in percentage. Enter your break-even sales answer in margi whole dollars. For example, an answer of $1 thousand should be entered as 1,000, not 1. Do not round intermediate calculations. n answer CM (to two decimal places) SB/E (to the nearest dollar) b. Calcate Spitfire's current DFL, DOL, and DTL. Round the answers to two decimal places. Do not round intermediate calculations. c. Calculate the current EPS and estimate what it would become if sales declined by 25%. Use the DTL first and then recalculate the modified income statement. (Assume a negative EBT generates a negative tax.) Round your answers to two decimal places. Use a minus sign to indicate a negative answer. Do not round intermediate calculations. EPS (using DTL) EPS (using modified income statement) The Spitfire Model Airplane Company has the following modified income statement ($000) at 100,000 units of production. $15,000 5,500 Variable Cost Fixed Cost $1,300 Interest(@10%) Tax (@40%) Number of shares a. What are Spitfire's contribution margin and dollar breakeven point? Enter your contribution in decimals and not in percentage. Enter your break-even sales answer in margi whole dollars. For example, an answer of $1 thousand should be entered as 1,000, not 1. Do not round intermediate calculations. n answer CM (to two decimal places) SB/E (to the nearest dollar) b. Calcate Spitfire's current DFL, DOL, and DTL. Round the answers to two decimal places. Do not round intermediate calculations. c. Calculate the current EPS and estimate what it would become if sales declined by 25%. Use the DTL first and then recalculate the modified income statement. (Assume a negative EBT generates a negative tax.) Round your answers to two decimal places. Use a minus sign to indicate a negative answer. Do not round intermediate calculations. EPS (using DTL) EPS (using modified income statement)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started