Given the following information: sales = $450; costs = $400; tax rate = 34%. Assuming costs run at a constant percentage of sales, if sales rise by 10% next year, what will net income be?

Question

Quizplus · Accepted Answer

Net income is calculated as (Sales - Costs) * (1 - Tax Rate). With a 10% increase, sales become $495 ($450 * 1.10). Costs, being a constant percentage of sales, also increase by 10% to $440 ($400 * 1.10). Thus, net income = ($495 - $440) * (1 - 0.34) = $55 * 0.66 = $36.30.

Given the Following Information: Sales = $450; Costs = $400;