Smith Bottling Company (SBC) expects this year's sales to be $560,000. SBC's variable oper- ating 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 at 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?