CORRECT ANSWER C. EARNINGS PER SHARE WOULD INCREASE $.13 PER SH...

354.

Correct answer c. Earnings per share would increase $.13 per share as shown below.

Sales

$20,000,000

$22,000,000

(increase 10%)

Contribution (30%)

6,000,000

6,600,000

Less administrative

300,000

300,000

Less commission (10%)

2,000,000

2,200,000

Operating profit

3,600,000

4,000,000

Interest expense

400,000

400,000

Profit before tax

3,200,000

3,600,000

Tax @35%

1,120,000

1,260,000

Net income

$ 2,080,000

$ 2,340,000

Earnings per share

$1.04

$1.17

(NI ÷ 2,000,000)