For these two questions I am pretty confused. For the first part of it I know I would have to find the net income after taxes to get the sales. Would my first step be to divide the net income per sales? Please help I am lost.
Sales
$ 576,000
$ 540,000
Variable costs
460,800
378,000
Contribution margin
115,200
162,000
Fixed costs
36,000
66,000
Income before taxes
79,200
96,000
Income taxes (32% rate)
25,344
30,720
Net income
$ 53,856
$ 65,280
1.) If the company wishes that each scenario (regular and simplified) generate a net income (after-tax) of $170,000, what is the amount of sales that needs to be generated? How many cups will then need to be sold? Prepare a contribution margin statement for this step and verify that your after-tax net income in fact equals $170,000 for both the regular and simplified scenario. (Note: Round the target profit before tax to the nearest dollar and the units to the nearest whole unit.)
2.) Assume that the company expects yogurt sales to decline by 20% next year. There will be no change in yogurt price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above with columns for each of the two store scenarios (assume a 32% tax rate, and that any loss before taxes yields a 32% tax savings).
Sales
$ 576,000
$ 540,000
Variable costs
460,800
378,000
Contribution margin
115,200
162,000
Fixed costs
36,000
66,000
Income before taxes
79,200
96,000
Income taxes (32% rate)
25,344
30,720
Net income
$ 53,856
$ 65,280
1.) If the company wishes that each scenario (regular and simplified) generate a net income (after-tax) of $170,000, what is the amount of sales that needs to be generated? How many cups will then need to be sold? Prepare a contribution margin statement for this step and verify that your after-tax net income in fact equals $170,000 for both the regular and simplified scenario. (Note: Round the target profit before tax to the nearest dollar and the units to the nearest whole unit.)
2.) Assume that the company expects yogurt sales to decline by 20% next year. There will be no change in yogurt price. Prepare forecasted financial results for next year following the format of the contribution margin income statement as shown above with columns for each of the two store scenarios (assume a 32% tax rate, and that any loss before taxes yields a 32% tax savings).