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a. Assume in 202 the same 15,500 -unit volume is maintained but that the sales price increases by 10 percent. Because of FIFO inventory policy,
a. Assume in 202 the same 15,500 -unit volume is maintained but that the sales price increases by 10 percent. Because of FIFO inventory policy, old inventory will still be charged off at $8.75 per unit. Also assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute aftertax income for 202. (Do not round intermediate calculations. Round your answer to the nearest whole number.) b. In part a, by what percent did aftertax income increase as a result of a 10 percent increase in the sales price? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) c. Now assume that in 203 the volume remains constant at 15,500 units, but the sales price decreases by 15 percent from its year 202 level. Also, because of FIFO inventory policy, cost of goods sold reflects the inflationary conditions of the prior year and is $9.25 per unit. Further, assume selling and administrative expense will be 6 percent of sales and depreciation wi be unchanged. The tax rate is 30 percent. Compute the aftertax income. (Round the sales price per unit to 2 decimal place but do not round any other intermediate calculations. Round your final answer to the nearest whole dollar amount.)
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