1. Assuming that the fixed costs are expected to remain at 200,000 for the coming year and the sales price per unit and variable costs per unit are also expected to remain constant, how much profit after taxes will be produced if the company anticipates sales for the coming year rising to 125 percent of the current year's level?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 9MC: A company has pre-tax or operating income of $120,000. If the tax rate is 40%, what is the companys...
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1. Assuming that the fixed costs are expected to remain at 200,000 for the coming year and the sales price per unit and variable costs per unit are also expected to remain constant, how much profit after taxes will be produced if the company anticipates sales for the coming year rising to 125 percent of the current year's level? 

Given the income statement of ABC Company
Sales
P400,000
Variable Cost
(120,000)
Contribution margin
280,000
Fixed Costs
(200,000)
Profit before taxes
80,000
Income Tax
(20,000)
Net Income
P 60,000
Transcribed Image Text:Given the income statement of ABC Company Sales P400,000 Variable Cost (120,000) Contribution margin 280,000 Fixed Costs (200,000) Profit before taxes 80,000 Income Tax (20,000) Net Income P 60,000
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