Profit Planning with Taxes
Carron Net Company manufactures sports nets for virtually every outdoor sport. Assume Carron sells nets for $50, on average, per unit. Last year, the company manufactured and sold 28,500 nets to obtain an after-tax profit of $261,250. Variable and fixed costs follow.
Variable Costs per UnitFixed Costs per YearManufacturing$20Manufacturing$220,638Selling and administrative4Selling and administrative193,800Total$24Total$414,438
Required
a. Determine the tax rate the company paid last year.
Note: Round your answer to the nearest whole percentage.
Answer 1
%
b.What unit sales volume is required to provide an after-tax profit of $380,000?
Note:Round your answer up to the nearest whole unit (for example, round 41.2 to 42).
Answer 2
units
c.If the company reduces the unit variable cost by $4 and increases fixed manufacturing costs by $50,350, what unit sales volume is required to provide an after-tax profit of $380,000?
Note:Round your answer up to the nearest whole unit (for example, round 41.2 to 42).
Answer 3
units
d.What assumptions are made about taxable income and tax rates in requirements (a) through (c)?