Answer the following questions using the information below:
Stephanie's Bridal Shoppe sells wedding dresses. The average selling price of each dress is $1,000, variable costs are $400, and fixed costs are $90,000.
-How many dresses must the Bridal Shoppe sell to yield after-tax net income of $18,000, assuming the tax rate is 40%?
A)200 dresses
B)170 dresses
C)150 dresses
D)145 dresses

Question

Quizplus · Accepted Answer

To yield after-tax net income of $18,000, the Bridal Shoppe must first earn pre-tax income of $30,000 ($18,000 / (1 - 0.40)).  To earn pre-tax income of $30,000, the Bridal Shoppe must sell 200 dresses (($30,000 + $90,000) / ($1,000 - $400)).

Answer the Following Questions Using the Information Below