Could someone help me with this problem I really have no idea where to start! Fi
ID: 2627136 • Letter: C
Question
Could someone help me with this problem I really have no idea where to start!
Find break even point, DOL, DOF, and EPS for Delsing Canning Company
Delsing Canning Company is considering an expansion of its facilities. Its current income statement is as follows:
Sales..................................................................
$5,500,000
Less: Variable expense (50% of sales).........
2,700,000
Fixed expense.............................................
1,850,000
Earnings before interest and taxes (EBIT).......
900,000
Interest (10% cost)...........................................
300,000
Earnings before taxes (EBT)............................
600,000
Tax (40%).........................................................
240,000
Earnings after taxes (EAT)...............................
$ 360,000
Shares of common stock
Sales..................................................................
$5,500,000
Less: Variable expense (50% of sales).........
2,700,000
Fixed expense.............................................
1,850,000
Earnings before interest and taxes (EBIT).......
900,000
Interest (10% cost)...........................................
300,000
Earnings before taxes (EBT)............................
600,000
Tax (40%).........................................................
240,000
Earnings after taxes (EAT)...............................
$ 360,000
Shares of common stock
Explanation / Answer
Sales..................................................................
$5,000,000
Less: Variable expense (50% of sales)...........
2,500,000
Fixed expense..............................................
1,800,000
Earnings before interest and taxes (EBIT)........
700,000
Interest (10% cost)............................................
200,000
Earnings before taxes (EBT).............................
500,000
Tax (30%)..........................................................
150,000
Earnings after taxes (EAT)................................
$ 350,000
Shares of common stock
Sales..................................................................
$5,000,000
Less: Variable expense (50% of sales)...........
2,500,000
Fixed expense..............................................
1,800,000
Earnings before interest and taxes (EBIT)........
700,000
Interest (10% cost)............................................
200,000
Earnings before taxes (EBT).............................
500,000
Tax (30%)..........................................................
150,000
Earnings after taxes (EAT)................................
$ 350,000
Shares of common stock