Question

Use goal seek to answer this question. All else equals, to have a net income of 20,000, the COGS margin percentage must be ______, and the gross profit must be ______. Review Later

Answer 1

Answer:

Use goal seek to answer this question. All else equals, to have a net income of 20,000, the COGS margin percentage must be 40%, and the gross profit must be $17,250.

Explanation:

The income statement is missing, so I looked it up and the information given was:

• Revenue 100,000
• COGS 40,000
• Gross Profit 60,000
• Salaries
• Marketing
• Rent
• Earnings Before Tax 23,000
• Income Tax 25%
• Net Income ?

Since COGS are$40,000 and total sales are $100,000, the COGS margin percentage = 40,000 / 100,000 = 40%

Since earnings before taxes are $23,000 and taxes are 25%, then net income = $23,000 x (1 - 25%) = $23,000 x 75% = $17,250