Oops, JAC forgot about taxes. Assume a tax rate of 21% Using information and your calculations from xlsx 7 determine the following: 1.) Assuming a desired after tax profit of $16,000, what is the pretax profit JAC has to earn? 2.) How many units does JAC have to sell to earn the desired after tax profit of $16,000. 225 units at $100 per unit Variable cost $20 per unit Contribution margin = Fixed costs = $18,000 Operating income = JAC has a desired profit of $16,000
Oops, JAC forgot about taxes.
Assume a tax rate of 21%
Using information and your calculations from xlsx 7 determine the following:
1.) Assuming a desired after tax profit of $16,000, what is the pretax profit JAC has to earn?
2.) How many units does JAC have to sell to earn the desired after tax profit of $16,000.
225 units at $100 per unit
Variable cost $20 per unit
Contribution margin =
Fixed costs = $18,000
Operating income =
JAC has a desired profit of $16,000
1.) Calculate the number of units they need to sell to accomplish this.
2.) Calculate the dollar amount of sales they need to accomplish this.
1. Required sale for target profit = ( Fixed cost + Desired profit ) / Contribution margin
Contribution margin = Sales price - Variable cost
= 100 - 20
= 80
Required sale for target profit = ( 18,000 + 16,000 ) / 80
= 34,000 / 80
= 425 units
The dollar amount of sales for target profit =( Fixed cost + Desired profit ) / Contribution margin ratio
Contribution margin ratio = Contribution / Sales
= 80 / 100
= 80 %
The dollar amount of sales for target profit = ( 18,000 + 16,000 ) / 80%
= $ 42,500
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