Blossom Products is considering a special project that will increase sales revenue by $60 000 without affecting costs.If the company has a tax rate of 25 per cent,what will be the after-tax profit?
A) $ 60 000
B) $ 45 000
C) $ 15 000
D) $105 000

Question

Quizplus · Accepted Answer

The increase in revenue of $60,000 is not affected by costs, so the entire amount will result in additional profit. However, since the company has a tax rate of 25%, we need to multiply the profit by 0.75 to calculate the after-tax profit.

After-tax profit = $60,000 x 0.75 = $45,000

Therefore, the best choice is B, as it correctly calculates the after-tax profit.

Blossom Products Is Considering a Special Project That Will Increase