You have developed the income statement in the popup window, 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 20 percent, by what percent would earnings before taxes (and net income) increase?

Sales $51,408,459 Variable costs (24,905,000) Revenue before fixed costs $26,503,459 Fixed costs (15,693,000) EBIT $10,810,459 Interest expense (1,857,681) Earnings before taxes $8,952,778 Taxes at 22% (1,969,611) Net income $6,983,167