Carr auto wholesalers had sales of 900000 in 2008 and their

Reference no: EM13597103

Carr Auto Wholesalers had sales of $900,000 in 2008 and their cost of goods sold represented 65 percent of sales. Selling and administrative expenses were 9 percent of sales. Depreciation expense was $10,000 and interest expense for the year was $8,000. The firm's tax rate is 30 percent.

a. Compute earnings after taxes.

b. Assume the firm hires Ms. Hood, an efficiency expert, as a consultant. She suggests that by increasing selling and administrative expenses to 12 per-cents of sales, sales can be increased to $1,000,000. The extra sales effort will also reduce cost of goods sold to 60 percent of sales. Depreciation expense will remain at $10,000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to $15,000. The firm's tax rate will remain at 30 percent. Compute revised earnings after taxes based on Ms.Hood's suggestions for Carr Auto Whole-salers. Will her ideas increase or decrease profitability?

Reference no: EM13597103

Questions Cloud

A carnot cycle uses 100 mol of a monatomic perfect gas as : a carnot cycle uses 1.00 mol of a monatomic perfect gas as the working substance from an initial state of 10.0 atm and

The ace book company sold 1500 finance textbooks for 185 : the ace book company sold 1500 finance textbooks for 185 each to high tuition university in 2008. these books cost ace

It is found that the boiling point of a binary solution of : a it is found that the boiling point of a binary solution of a and b with xa 0.6589 is 88degc. at this temperature the

When the partial duration are in the table 75 estimate the : when the partial duration are in the table 7.5 estimate the effect of a shift in the yield curve where the ten year

Carr auto wholesalers had sales of 900000 in 2008 and their : carr auto wholesalers had sales of 900000 in 2008 and their cost of goods sold represented 65 percent of sales. selling

Suppose further that snappy decides to make changes in its : snappy tiles is a small distributor of marble tiles. snappy identifies its three major activities and cost pools as

Johnson alarm systems had 800000 if retained earnings on : johnson alarm systems had 800000 if retained earnings on december 31 2008. the company paid common dividends of 60000

My company sells household cleaning products the research : my company sells household cleaning products. the research department has developed a new cleaner for which a standard

A write the propagation steps leading to the formation of : a write the propagation steps leading to the formation of dichloromethane ch2cl2 from chloromethane.b explain why

User Account

All Pages