Sign In Sign Up Ask an AI advisor
bearminar2156
bearminar2156
06.05.2020 • 
Business

EBIT Sensitivity Stewart Industries sells its finished product for $ 8.69 per unit. Its fixed operating costs are $ 20,500, and the variable operating cost per unit is $ 5.59.

a. Calculate the firm's earnings before interest and taxes (EBIT) for sales of 9,000 units.
b. Calculate the firm's EBIT for sales of 6,000 and 12,000 units, respectively.
c. Calculate the percentage changes in sales (from the 9,000-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.

Solved
Show answers

Ask an AI advisor a question

I want advice