HOPING TO GET SOME HELP WITH THIS QUESTION! Ryan Corporation has the following information relating to...
HOPING TO GET SOME HELP WITH THIS QUESTION!
Ryan Corporation has the following information relating to its manufacturing and selling of cakes:
Average current selling price: $14.00
Average variable cost of cakes: $6.00
Fixed yearly costs: $240,000
The income tax rate is 35%
If Ryan Corporation wanted to make a net income after tax of $100,000, how many cakes would they have to produce and sell?
a. 49,231 cakes
b. 45,333 cakes
c. 54,443 cakes
d. 57,300 cakes
Homework Answers
Let the number of units be A
then total revenue = 14*A
total cost = 6*A+240000
Income before tax = TR-TC
As 65%(100-35%) of income is actual profit after tax which should be equal to 100000
So, (14*A- (6*A+240000)) x .65 = 1000000
A= (8A-240000) x .65 = 100000
A= 256000/8*.65
A=49230.76
A=49231 cakes
Option(A)
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