Solution-Determine the level of sales that would generate

Determine the level of sales that would generate net income

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Reference no: EM133169017

Question - Skyline Corp. produces a single product. The projected operating income for the coming year is as follows:

Sales $1,800,000

Variable costs 756,000

Contribution margin 1,044,000

Fixed costs 764,000

Operating income $280,000

Skyline Corp. is subject to tax at a rate of 35%.

Required -

a) Calculate the break-even point {in dollars} and the margin of safety (in dollars).

b) Determine the level of sales that would generate net income after tax of $325,000.

c) The marketing department believes that a price cut of 5%, combined with an increase in the annual advertising budget of $80,000, would increase sales by 20%. Calculate the incremental benefit of this proposal. Use incremental analysis - do NOT prepare a revised income statement.

Reference no: EM133169017

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Determine the level of sales that would generate net income

Reference no: EM133169017

Reference no: EM133169017

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