This preview shows page 1. Sign up to view the full content.
Unformatted text preview: ing costs of $40,000. How many books
must JWG sell this year to achieve the breakeven point for the stated operating
costs, given the following different circumstances?
a. All figures remain the same as last year.
b. Fixed operating costs increase to $44,000; all other figures remain the same.
c. The selling price increases to $10.50; all costs remain the same as last year.
d. Variable operating cost per book increases to $8.50; all other figures remain
the same. 456 PART 4 Long-Term Financial Decisions e. What conclusions about the operating breakeven point can be drawn from
LG2 11–6 EBIT sensitivity Stewart Industries sells its finished product for $9 per unit. Its
fixed operating costs are $20,000, and the variable operating cost per unit is $5.
a. Calculate the firm’s earnings before interest and taxes (EBIT) for sales of
b. Calculate the firm’s EBIT for sales of 8,000 and 12,000 units, respectively.
c. Calculate the percentage changes in sales (from the 10,000-unit base level)
and associated percentage changes in EBIT for the shifts in sa...
View Full Document
This document was uploaded on 03/30/2014.
- Spring '14