Problem 14-16 The Spitfire Model Airplane Company has the following modified income statement ($000) at...
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Problem 14-16 The Spitfire Model Airplane Company has the following modified income statement ($000) at 100,000 units of production. Revenue $16,000 Variable Cost 5,500 Fixed Cost 9200 EBIT $1,300 Interest(@10%) 500 EBT $800 Tax (@40%) 320 EAT $480 Number of shares 20,000 a. What are Spitfire's contribution margin and dollar breakeven point? Enter your contribution margin answer in decimals and not in percentage. Enter your break-even sales answer in whole dollars. For example, an answer of $1 thousand should be entered as 1,000, not 1. Do not round intermediate calculations. CM (to two decimal places) 65.62 x SB/E (to the nearest dollar) $ 14,020 X b. Calculate Spitfire's current DFL, DOL, and DTL. Round the answers to two decimal places. Do not round intermediate calculations. DFL 1.62 DOL 8.07 DTL 13.12 c. Calculate the current EPS and estimate what it would become if sales declined by 25%. Use the DTL first and then recalculate the modified income statement. (Assume a negative EBT generates a negative tax.) Round your answers to two decimal places. Use a minus sign to indicate a negative answer. Do not round intermediate calculations. EPS (using DTL) EPS (using modified income statement) 4
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