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Legacy Company Is Considering the Production and Sale of a New

Question 126

Essay

Legacy Company is considering the production and sale of a new product with the following sales and cost data: unit sales price $18; unit variable costs $8.10; and total fixed costs of $8,250. Legacy is subject to a 25% tax rate. Determine the dollar sales needed to generate an after-tax income of $33,000.

Correct Answer:

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Target pretax income = $33,000/(1 - .25)...

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