Use the following data to construct an income statement for cheryl's posters:
Sales Price: $20 per unit
Variable Cost: $ 10 per unit
Fixed Cost: $ Sales in units: $1000
Required:
1. Calculate the Earnings before Interest and Taxes for Cheryl's Posters using the data provided above.
2. Prepare two pro forma statements assunimg:
A 50% increase in sales (1500)
A 50% decrease in sales (500)
3. What is the impact on earnings before interest and taxes (EBIT) of the 50% increase/decrease in sales?
4. Explain using the concept of leaverage.