Homework Answers
Target before-tax net income=$88000/(1-tax rate)
=$88000/(1-0.2)=$110,000
Target Contribution margin=Target before tax net income+Fixed costs
=(110,000+96000)=$206000
Hence target sales=$206000/Contribution margin ratio
=$206000/0.4
=-$515,000.
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Question 12 How many sales are required to earn a target after-tax net income of $88000...
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