7 The CEO of Newark Inc. has provided you with the following information for its

Question

7 The CEO of Newark Inc. has provided you with the following information for its operation for 2013. Dollar figures are in thousands. TVC? Sales Revenue Cost of goods sold Total contribution margin Fixed costs: manufacturing Fixed costs: selling and administrative Variable selling expense $200 40 20 20 076 The tax rate for Newark is 25% if they want to increase the after-tax ncome for 2014 by $12. by how much do they have to increase their sales revenue? Assume everything else stays constant (including the price) 16.00 s 30.00 C. 40.00 D. 32.00 'es : 200 O1 VC E. None of the above S

Explanation / Answer

Contribution margin income statement

So answer is d) $32

Present Proposed Sales 200 232 Variable cost 100 116 Contribution margin 100 116 Fixed cost 60 60 Income before tax 40 42*100/75 = 56 Income tax 10 42*25/75 = 14 Net income 30 (30+12) = 42

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