Answer the following questions using the information below:
Assume the following cost information for Fernandez Company:

-If Bel Air Realtor plans an operating income of $210,000 and the tax rate is 30%, then Bel Air's planned net income should be:
A)$63,000
B)$147,000
C)$273,000
D)$357,000

Question

Answer the following questions using the information below:
Assume the following cost information for Fernandez Company:
 
-If Bel Air Realtor plans an operating income of $210,000 and the tax rate is 30%, then Bel Air's planned net income should be:
A)$63,000 
B)$147,000 
C)$273,000 
D)$357,000

Quizplus · Accepted Answer

To calculate the planned net income, we need to first calculate the required pretax income:
Pretax Income = Operating Income / (1 - Tax Rate)
= $210,000 / (1 - 0.3)
= $300,000
Net Income = Pretax Income - Taxes
= $300,000 - ($300,000 x 0.3)
= $210,000
Therefore, Bel Air's planned net income should be $210,000, which corresponds to choice B.

Answer the Following Questions Using the Information Below