Purchase Solution

Managerial Finance and EBIT Sales

Not what you're looking for?

Ask Custom Question

P11-6 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
10,000 units.
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 sales indicated
in part b.
d. On the basis of your findings in part c, comment on the sensitivity of changes
in EBIT in response to changes in sales.

Purchase this Solution

Solution Summary

This solution shows step-by-step calculations to determine the earnings before interest and taxes for the sales using variable and fixed costs, the percentage change in sales, and provides comments on the sensitivity of changes.

Solution provided by:
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
Recent Feedback
  • "ty i have more need help with"
  • "ty i have jmore i need help with"
  • "great help"
  • "excellent help"
  • "Very helpful and easy to understand."
Purchase this Solution


Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Motivation

This tests some key elements of major motivation theories.