Assume the following information for Rodney Company:
$\begin{array}{ll}
\text { Selling price per unit } & \$ 100 \
\text { Variable cost per unit } & \$ 80 \
\text { Total fixed costs } & \$ 80,000 \
\text { After-tax net income } & \$ 24,000 \
\text { Taxrate } & 40 \%
\end{array}$
To achieve the targeted after-tax net income,what amount of sales in dollars is necessary?
A) $400,000
B) $520,000
C) $600,000
D) $660,000

Question

Quizplus · Accepted Answer

To find the necessary sales, first calculate the required pre-tax income: $24,000 / (1 - 0.40) = $40,000. Then, calculate the contribution margin per unit: $100 - $80 = $20. The required sales in units is: ($80,000 + $40,000) / $20 = 6,000 units. Finally, convert units to sales dollars: 6,000 units * $100 = $600,000.

Assume the Following Information for Rodney Company To Achieve the Targeted After-Tax Net Income,what Amount of Sales