Acme Cleaning Supply sells VeryKleen. Materials cost $4.50 per bottle and there is a 5.0% sales...
Acme Cleaning Supply sells VeryKleen. Materials cost $4.50 per bottle and there is a 5.0% sales commission. Plan sales are 40,000 units at $9.00 per bottle. Fixed costs total $1.25 per bottle at the planned sales level. The company's tax rate is 35.0%. Sales for $25,000 in income after tax is closest to?
Possible answers:
$196,581
$183,334
$248,000
$166,667
$203,704
Homework Answers
The Answer is $196,581
Working Notes:
| Particulars | Qty | Price | Total | Reverse Working | ||||
| Sales | 40,000.00 | 9.00 | 360,000.00 | Sales = | 196,581.20 | Contribution / PV Ratio | ||
| Less | Material | 40,000.00 | 4.50 | 180,000.00 | ||||
| Sales Commission | 18,000.00 | |||||||
| Contribution | 162,000.00 | Contribution | 88,461.54 | PBT + Fixed Cost | ||||
| Fixed Cost | 40,000.00 | 1.25 | 50,000.00 | Fixed Cost | 50,000.00 | As per question | ||
| Profit | 112,000.00 | Profit Before Tax | 38,461.54 | 25000/65% | ||||
| Less: Tax @ 35% | 39,200.00 | Tax | 13,461.54 | Tax @ 35% | ||||
| Net Income | 72,800.00 | Net Income | 25,000.00 | As per question | ||||
| Net Profit Margin | 20.22% | |||||||
| PV Ratio = Contribution / Sales *100 | 45% | |||||||
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