Carla Company, which is subject to a 40% income tax rate, projected its income before taxes...

Question

Question

Carla Company, which is subject to a 40% income tax rate, projected its income before taxes...

Carla Company, which is subject to a 40% income tax rate, projected its income before taxes for next year as shown here:

Sales (184,000 units)		$9,200,000
Cost of sales
	Variable costs	2,300,000
	Fixed costs	3,450,000
Pretax earning		$3,450,000

If Carla’s net assets are $41,400,000, what amount of revenue must be achieved for Carla to earn a 10% after-tax return on assets?

Total Revenue

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

Contribution Margin = Sales - variable cost

		=$9200000-2300000

		=6900000

Contribution margin ratio = Contribution margin / sales

	=$6900000/9200000

	=75%

Aftertax required return = $41400000*10% =$4140000

	Before tax required return = $4140000/0.60
		=$6900000

	Reqruired Contribution Margin = $6900000+3450000

		=$10350000	10350000

	Required Sales = Contribution Margin / Contribution margin ratio

		=$10350000/0.75

		=$13800000


	Total Revenue = $13800000

Add a comment

Answer 2

Similar Homework Help Questions

Carla Company, which is subject to a 40% income tax rate, projected its income before taxes...

Carla Company, which is subject to a 40% income tax rate, projected its income before taxes for next year as shown here: Sales (184,000 units) $9,200,000 Cost of sales Variable costs 2,300,000 Fixed costs 3,450,000 Pretax earning $3,450,000 If Carla wants $5,175,000 in pretax earning, what is the required level of sales, in dollars? Total Revenue
Carla Company, which is subject to a 40% income tax rate, projected its income before taxes...

Carla Company, which is subject to a 40% income tax rate, projected its income before taxes for next year as shown here: Sales (184,000 units) $9,200,000 Cost of sales Variable costs 2,300,000 Fixed costs 3,450,000 Pretax earning $3,450,000 If Carla wants after-tax earnings of 30% of sales, what is the required level of sales in dollars and in units? Revenue: $ or units
Madden Company has projected its income before taxes for next year as shown below. Madden is...

Madden Company has projected its income before taxes for next year as shown below. Madden is subject to a 40% income tax rate. Sales (160,000 units) $ 8,000,000 Cost of sales Variable costs $2,000,000 Fixed costs 3,000,000 Total costs (5,000,000) Income before taxes $ 3,000,000 Question Madden’s net assets are $36,000,000. The dollar sales that must be achieved for Madden to earn a 10% after-tax return on assets would be A.$8,800,000 B.$16,000,000 C.$12,000,000 D.$6,880,000

Requirements: 1. Prepare Journal Entry to record income tax expense, deferred taxes, and income taxes payable...

Requirements: 1. Prepare Journal Entry to record income tax expense, deferred taxes, and income taxes payable for 2018. 2. Draft the income tax expense section of the Income Statement, beginning with "Income before income taxes". 3. Write an analysis directed toward the team at Good Company describing what the numbers mean and how they relate to the business. Information: Good Company began operations in 2018 and has provided the following information: 1. Pretax financial income for 2018 is $200,000 2....
Please check my answers. 1. Prepare Journal Entry to record income tax expense, deferred taxes, and...

Please check my answers. 1. Prepare Journal Entry to record income tax expense, deferred taxes, and income taxes payable for 2018 2. Draft the income tax expense section of the Income Statement, beginning with Income before income taxes". . Write an analysis directed toward the team at Good Company describing what the numbers mean and how they relate to the business. Information: Good Company began operations in 2018 and has provided the following information: 1. Pretax financial income for 2018...
The Blaylock Company in year 1 has pretax financial income (Income Before Tax) at the end of 2016...

The Blaylock Company in year 1 has pretax financial income (Income Before Tax) at the end of 2016 of $610,000. There are 3 differences between the pretax financial statement and the tax return income as shown below: 3 items were different on Financial Statement compared to Tax Return Financial Statement Tax Return Depreciation “S/L” $10,000 $20,000 “accelerated” Percentage of Completion Profit $35,000 -0- completed contract c. “Unearned” Revenue of $30,000 $30,000 “cash basis” Required: 1. Prepare a schedule that shows...

Effect of taxes on break-even and target volume Machine INC desires an after-tax income of $500,000. It has fixed costs of $2,500,000, a unit sales price of $300, and unit variable costs of $150; it...

Effect of taxes on break-even and target volume Machine INC desires an after-tax income of $500,000. It has fixed costs of $2,500,000, a unit sales price of $300, and unit variable costs of $150; it is in the 40% tax bracket. Required: A. What amount of the pre-tax income is needed to earn an after-tax income B. What target volume sales revenue must be reached to earn the $500,000 C. Assuming that this is a single-product firm, how many units...
Problem - 3 (Five Differences, Compute Taxable income and Deferred Taxes, Draft Income Statement) Wise Company...

Problem - 3 (Five Differences, Compute Taxable income and Deferred Taxes, Draft Income Statement) Wise Company began operations at the beginning of 2015. The following information pertains to this company. 1. Pretax financial income for 2015 is $100,000. 2. The tax rate enacted for 2015 and future years is 40%. 3. Differences between the 2015 income statement and tax return are listed below: (a) Warranty expense accrued for financial reporting purposes amounts to $7,000. Warranty deduc- tions per the tax...
17-5 conformity between its taxable income and income before taxes. BE17-1. Income Taxes Payable. Immox Company...

17-5 conformity between its taxable income and income before taxes. BE17-1. Income Taxes Payable. Immox Company has conformity between its taxab In Immox's taxes payable are $140,000 and its tax rate is 40%, what is its net income BE17-2. Income Taxes Payable. Limmox Company has conformity between its tas taxes. Limmox Company's net income after taxes is $195,000 ang rmity between its taxable income and income before et income after taxes is $195,000 and its tax rate is 35%. What...

Jordan Company produces a single product. The projected income statement for the coming month, based on...

Jordan Company produces a single product. The projected income statement for the coming month, based on sales of 20,000 units is: Sales $200,000 Less: Variable costs 140,000 Contribution margin $ 60,000 Less: Fixed costs 45,000 Operating income $ 15,000 Instructions: 1. Compute the unit contribution margin and the number of units that must be sold to break even. Suppose that 3,000 units are sold above the break-even point. What is the profit? 2. Compute the contribution margin ratio and the...

Carla Company, which is subject to a 40% income tax rate, projected its income before taxes...

Homework Answers