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Break-even analysis

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Data of cost structure of the company: Camping USA Inc.

Output level 120,000 units
Operating assets $6,000,000
Operating assets turnover 12 times
Return on operating assets 48%
Degree of operating leverage 10 times
Interest expense $720,000
Tax rate 42%

Determine the break-even point in units of output for the company; also prepare supporting documents, which demonstrate how you arrived at your conclusion. Have the information needed to prepare an analytical income statement. In a format that is acceptable for a meeting discussion, prepare answers to the following questions:

a) What is the firm's break-even point in sales dollars?

b) If sales should increase by 40%, by what percentage would the EBIT (earnings before taxes) and net income increase?

c) Prepare another income statement, this time to verify the calculations from part d.

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The solution explains some calculations relating to breakeven analysis

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