Question

suppose company has a 32% income tax rate, a contribution margin ratio of 45% and fixe costs of 664,000. what sales volume is necessary to achieve and after tax income of 136000

Answer 1

Answer:

$1,777,777.78

Explanation:

The computation of the sales volume needs to be achieved is shown below:

Sales volume is

= Fixed cost + after tax income ÷ (contribution margin ratio)

= ($664,000 + $136,000) ÷ (0.45)

= $1,777,777.78

We ignored the income tax rate as there is no need in the computation part

By using the above formula, it can be determined in an easily manner