Answered

Michael’s is considering a project that has projected sales of 4,200 units ± 5 percent, a sales price per unit of $50 ± 4 percent, variable costs per unit of $25 ± 5 percent, and fixed costs per year of $45,000 ± 3 percent. The depreciation expense is $11,000 per year and the tax rate is 33 percent. What is the annual net income under the best case scenario?

Answer :

Answer:

annual net income is $23077.25

Explanation:

Given data:

sales volume = 4200 units

selling price/units $50

variable cost/units $25

fixed cost is $45000

Total sales [tex]unit = 4200 + 5\% \times 4200 = 4410 units[/tex]

selling price/unit [tex]= $50 + 4\%\times $50 = $52[/tex]

variable cost/unit [tex]= $25- 5\%\times 25 = $23.75[/tex]

fixed cost  [tex]= 45000 - 3\%\times 45000 = $43650[/tex]

sales  [tex]=4410 \times 52 = $229320.00[/tex]

variable cost  [tex]= 4410 \times 23.75 = 104737.5[/tex]

difference = 229320 - 104737 = 124583

fixed cost = $43650

depreciation exchange = $11000

so total income prior to tax = 124583 - (43650 + 11000) =$ 69932.5

tax rate is 33%

so total income after tax is [tex]= 69932.5 \times .33 = $23077.725[/tex]

Other Questions