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a. Assume that the same 16,700 unit volume is maintained in 20XY, but the sales price increases by 10 peicent. Because of FIFO inventory policy,

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a. Assume that the same 16,700 unit volume is maintained in 20XY, but the sales price increases by 10 peicent. Because of FIFO inventory policy, old inventory will still be charged off at $10.50 per unit. Also assume that selling and administrative expense will be 6 percent of sales and amortization will be unchanged. The tax rate is 34 percent. Compute aftertax income for 20XY. (Do not round the intermediate calculations. Round the final answer to nearest whole dollar.) Aftertax income $ b. In part a, by what percent did aftertax income increase as a result of a 10 percent increase in the sales price? (Round the aftertax income answer to nearest dollar. Round the final answer to 2 decimal places.) Gain in aftertax income % c. Now assume in 20XZ the volume remains constant at 16,700 units, but that the sales price decreases by 15 percent from its 20XY level. Also, because of FIFO inventory policy, cost of goods sold reflects the inflationary conditions of the prior year and is $11.00 per unit. Further assume that selling and administrative expense will be 6 percent of sales and amortization will be unchanged. The tax rate is 34 percent. Compute aftertax income. (Do not round intermediate calculations. Round final answer to nearest whole dollar.)

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