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What will be SBC EBIT and net income

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Problem - Smith Bottling Company (SBC) expects this year's sales to be $560,000. SBC's variable operating costs are 75 percent of sales and its fixed operating costs are $90,000. SBC pays interest on its debt equal to $30,000 per year and its marginal tax rate is 35 percent.

(a) Compute SBC's DOL, DFL, and DTL.

(b) If sales turn out to be $588,000 rather than $560,000, what will be SBC's EBIT and net income?

Reference no: EM132698734

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