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27. Swann Systems is forecasting the following income statement for the upcoming year: Sales $5,000,000 Operating costs (excluding depreciation) $3,000,000 Gross margin $2,000,000 Depreciation $500,000
27. Swann Systems is forecasting the following income statement for the upcoming year: Sales $5,000,000 Operating costs (excluding depreciation) $3,000,000 Gross margin $2,000,000 Depreciation $500,000 EBIT $1,500,000 Interest Expenses $500,000 EBT $1,000,000 Taxes (40%) $400,000 Net income $600,000 The company's president is disappointed with the forecast and would like to see Swann generate higher sales and a forecasted net income of $1,200,000. Assume that operating costs (excluding depreciation) are always 60% of sales. Also, assume that depreciation, interest expense, and the company's tax rate, which is 50 percent, will remain the same even if sales change. What level of sales would Swann have to obtain to generate $1,800,000 in net income
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