You have developed the income statement for the Hugo Boss Corporation. It represents the most recent year's operations, which ended yesterday. Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions:

a. What is the firm's break-even point in sales dollars?

b. If sales should increase by 25 percent, by what percent would earnings before taxes (and net income) increase?

Sales 50,025,916 Variable costs (25,274,000) Revenue before fixed costs 24,751,916 Fixed costs (11,284,000) EBIT 13,467,916 Interest expense (1,927,485) Earnings before taxes 11,540,431 Taxes at 21% (2,423,491) Net income NI