PLEASE SHOW ALL WORR 1. (25 pts) Moto, Inc. manufactures and sells scooters. A p

Question

PLEASE SHOW ALL WORR 1. (25 pts) Moto, Inc. manufactures and sells scooters. A projected income statement for the expected sales volume of 100,000 scooters is as follows: Sales Variable expenses Contribution margin Fixed expenses Before-tax profit $7.200,000 2.800,000 $4,400,000 3,000000 $1,400,000 a) How many scooters would need to be sold to have a before-tax profit of $2,900,000 b) What dollar sales volume would be required to achieve $3,500,000 of before-tax profit? Now assume that Moto, Inc. is subject to a 40% tax. How many scooters must it sell to c) achieve an after-tax income of $1,500,000?

Explanation / Answer

Solution :-

A) CALCULATE HOW MANY SCOOTERS NEED TO BE SOLD FOR BEFORE TAX PROFIT OF 2900000:

PROFIT = SALES-VARIABLE COST -FIXED COST

2900000=72X-28X-3000000

5900000=44X

X(SCOOTERS) =134091 SCOOTER....

B) CALCULATE DOLLARS SALES VOLUME WOULD BE REQUIRED TO ACHIEVE 3500000 BEFORE TAXPROFIT :

PROFIT = SALES - VARIABLE COST-FIXED COST

3500000=72X-28X-3000000

6500000=44X

X(SCOOTERS) = 147727.27

DOLLARS VOLUME = 10000000

C) CALCULATE HOW MANY SCOOTERS FOR EARN AFTER TAX 1500000 :

BEFORE TAX = 1500000*100/60=2500000

PROFIT = SALES - VARIABLE COST - FIXED COST

2500000=75X-30X-3000000

5500000=44X

X(SCOOTERS) = 125000

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