1 profit planning model with an average tax rate 2 input data sales price per ti

Question

1 profit planning model with an average tax rate

2 input data                                                                                      sales   price per ticket       $7.00

3ballpark seating capacity per game                   4,000           v cost per ticket                   $2.00

4 home games per season                                  54               F facility costs   per season   $ 450,000

5 average percentage   seat sold   per game    85%        after tax target profit           $ 400,000

                                                                                                      average tax rate            20%

review the information raw 1 to 5 assume that company takes action to decrease its average tax rate to 18 percent by outsourcing its tax planning and this increased fcility level costs by an average of $10,000 per season


please answer all


A compute new break even volum


B compute new target profit volum


C explain change in this volum


D compute new profit or loss after tax

Explanation / Answer

A compute new break even volume

Break Even Volume = (450,000+10000)/5 = 92,000 ticket

B compute new target profit volum

New target Profit Volume = (400000/0.80+460,000)/5 = 192,000 ticket

D compute new profit or loss after tax

New Profit or loss after tax = 500,000-18%*500000= $410000

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