Solution-Calculate the estimated total profit before taxes

Calculate the estimated total profit before taxes

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Reference no: EM133126062

Question - The sales manager of Trishas Global Marketing (TGM) is considering expanding sales by taking their Original Widget and modifying it for export into the European and Asian markets. Relatively minor cosmetic changes will be made to enhance the product's appeal to local tastes. After reviewing the sales forecasts, the sales department feels that 65% of units sold will be the Original product, 25% will be new Euro model and the remainder will be the new Pacific model.

The following information has been assembled by the sales and production departments:

	Original	Euro	Pacific
Contribution margin Per unit	$20.00	$32.00	$10.00

The common fixed costs associated with the manufacture of these three products are $2,500,000 per year and TGM has a marginal tax rate of 20%. If the target sales mix is achieved and 200,000 total units are sold, calculate the estimated total profit before taxes assuming a $1.64 per unit increase in the sales price of the Original can be obtained by investing $110,000 in a sales campaign. No other assumptions are changed. Round to the nearest $1.00.

Reference no: EM133126062

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Calculate the estimated total profit before taxes

Reference no: EM133126062

Reference no: EM133126062

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