Problem:
Lambda, Inc. has a base level of sales of 150,000 units. Sales price per unit is $10.00 and variable cost per unit is $6.50. Total annual operating fixed costs are $155,000, and the annual interest expense is $90,000. (For consistency with answers below, carry all calculations to two decimals.)
Required:
Assume that Lambda expects units sold to increase 20%. What will be the resulting percentage change in earnings per share?
Select one:
a. 28%
b. 31%
c. 37%
d. 46%