Example: Kalman Company has the following information Price Unit variable cost Total fixed cost Tax...
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Example: Kalman Company has the following information Price Unit variable cost Total fixed cost Tax rate Kalman wants to earn after-tax income of $9,000 next year. What is the before-tax income? $12 $3 $31,500 40 % Before-tax income- $9,000/(1 0.4)-$15,000 Suppose Kalman's tax rate was 35%, the before-tax income needed to earn $9,000 after taxes would be lower $15,000. The before-tax income in this case would be $13,846(Round to the nearest dollar). The sales revenue needed to earn this level of before-tax income would be Sales Total variable cost (0.25 x $60,461) Contribution margin Total fixed cost Operating income Less: income taxes (0.35 x $13,846) After-tax income Using the Kalman Company data, for each of the following scenarios, fill in the before-tax income needed and the sales revenue needed to earn the given after-tax income. Round all dollar amounts to the nearest dollar (Round to the nearest dollar). We can show that this is true by constructing an income statement. $60,461 15,115 $45,346 31,500 $13,846 4,846 $9,000 Target After-TaxTax Before-Tax Needed Sales Income $8,000 $8,000 $8,000 Rate 40% 3590 $ 12,308 25% $ 10,667| Income Revenue A. $113,33 3 $ C
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