Solution-Calculate the new ebit and percent change

Calculate the new ebit and percent change

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Reference no: EM131105045

Problem 1:

Surf Bicycles Inc. Will manufacture and sell 200,000 units next year. Fixed costs will total $500,000, and variable costs will be 60% of sales. The bicycles will sell for $200 each.

The firm wants to achieve a level of earnings before interest and taxes of $250,000. How many units must they sell to achieve that result?

Problem 2:

Alpha Electronics has the following income statement:

Sales	400,000
Total variable costs	240,000
Contribution margin	160,000
Fixed costs	140,000
EBIT	20,000

Calculate the new EBIT and percent change, assuming:

1. Sales increase by 20%

2. Sales decrease by 20%

Reference no: EM131105045

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Calculate the new ebit and percent change

Reference no: EM131105045

Reference no: EM131105045

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