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The Spitfire Model Airplane Company has the following modified income statement $000 at 100000 units of production Revenue $10000 Variable Cost 6500 Fixed Cost

The Spitfire Model Airplane Company has the following modified income statement ($000) at 100,000 units of production. Revenue............. $10,000 Variable Cost ........... 6,500 Fixed Cost ............ 2,200 EBIT .............. $ 1,300 Interest (@ 10%) ............. 500 EBT .............. $ 800 Tax (@ 40%)............ 320 Net Income.............. $ 480 # shares............... 20,000 a. What are Spitfire s contribution margin and dollar breakeven point? b. Calculate Spitfire s current DFL, DOL, and DTL. c. Calculate the current EPS and estimate what it would become if sales declined by 25%. Use the DTL first and then recalculate the modified income statement. (Assume a negative EBT generates a negative tax.)

 

May 02 2020 View more View Less

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