Question

The following data is for the Rose Company, a manufacturer of cat beds:

After-tax income	$ 109561
Selling price per unit	$ 3.98
Variable cost per unit	$ 1.61
Total fixed costs	$ 120644

If Rose sold 304893 units, what is the income tax rate?

Select one:

a. 90.81%

b. 18.20%

c. 15.16%

d. 81.80%

Answer 1

Correct answer----------(d) 81.80%

Working

Sales revenue (Units x Sales price)	$ 1,213,474
Variable cost	$ 490,878
Contribution margin	$ 722,596
Fixed cost	$ 120,644
Operating income (loss)	$ 601,952
Income tax expense (balancing figure)	$ 492,391
Net income	$ 109,561

.

Income tax expense	$ 492,391
Operating income	$ 601,952
Rate of tax	81.80%