Answer (D) is correct . An after-tax net income of $22,500 equals a pretax income of $37,500 [$22,500 ÷ (1.0 – .40)]. With a UCM of $6 contributing toward the $153,000 total of fixed cost ($115,500) and desired profit ($37,500), 25,500 units ($153,000 ÷ $6) must be sold. At $9 per unit, sales revenue is $229,500.
Answer (A) is incorrect because The sales revenue when fixed costs are not increased by 10% is $213,750.
Answer (B) is incorrect because Using a 60% tax rate rather than a 40% tax rate results in $257,625.
Answer (C) is incorrect because Failing to convert the after-tax income of $22,500 to pretax income of $37,500 [$22,500 ÷ (1.0 – .40)] results in $207,000.
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If Donnelly Corporation wishes to earn $22,500 in net income for the coming year, the company’s sales volume in dollars must be
