financial statements15

financial statements15 - to achieve? Assume that Hebner’s...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Sales level Answer: e Diff: M i . Hebner Housing Corporation has forecast the following numbers for this upcoming year: Sales = $1,000,000. Cost of goods sold = 600,000. Interest expense = 100,000. Net income = 180,000. The company is in the 40 percent tax bracket. Its cost of goods sold always represents 60 percent of its sales. That is, if the company’s sales were to increase to $1.5 million, its cost of goods sold would increase to $900,000. The company’s CEO is unhappy with the forecast and wants the firm to achieve a net income equal to $240,000. In order to achieve this level of net income, what level of sales will the company have
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: to achieve? Assume that Hebner’s interest expense remains constant. a. $ 400,000 b. $ 500,000 c. $ 750,000 d. $1,000,000 e. $1,250,000 i . Sales level Answer: e Diff: M This question requires working backwards through the income statement from net income to sales. The income statement will look like this: Sales $1,250,000 $500,000/(1 - 0.6) CGS (60%) 750,000 $1,250,000 × 0.6 EBIT $ 500,000 $100,000 + $400,000 Interest 100,000 (Given) EBT $ 400,000 $240,000/(1 - 0.4) Tax (40%) 160,000 NI $ 240,000...
View Full Document

This note was uploaded on 08/04/2011 for the course COMM 101 taught by Professor Sy during the Spring '11 term at USC.

Page1 / 2

financial statements15 - to achieve? Assume that Hebner’s...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online