Effect of taxes on break-even and target volume
Sinclair Products Inc. desires to earn an after-tax income of $150,000. It has fixed costs of $1,000,000, a unit sales price of $500, and unit variable costs of $200. The company is in the 30% tax bracket.
1. How many dollars of sales revenue must be earned to achieve the after-tax profit of $150,000?
2. How many dollars of revenue would have to be earned to achieve $150,000 of profit, if there had been no income tax?
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