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The WinterCompany manufactures chairs. The company's income statement for 2021 is as follows: Winter COMPANY Income Statement Year ended December 31, 2021 Sales $ 10,000,000
The WinterCompany manufactures chairs. The company's income statement for 2021 is as follows: Winter COMPANY Income Statement Year ended December 31, 2021 Sales $ 10,000,000 Less: Variable costs $ 5,500,000 Contribution margin $ 4,500,000 Less: Fixed costs $ 2,025,000 Operating profit or (EBIT) $ 2,475,000 Interest expense $ 100,000 Earnings before taxes (EBT) $ 2,375,000 Income tax expense (40%) $ 950,000 Earnings after taxes (EAT) $ 1,425,000 Quantity 100,000 Price $ 100.00 Variable cost per unit $ 55.00 4. Using your answers above calculate the percentage increase in EBIT and EBT from a 35% increase in sales volume. (Round the final answer to the nearest whole number.) 5. Does financial or operating leverage have the greater impact? Hint, recalculate DOL and DFL with 35% increase in sales
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