Question
A company has direct production costs equal to 50 percent of total annual sales, and fixed charges, overhead, and general expenses equal to $200,000. If
A company has direct production costs equal to 50 percent of total annual sales, and fixed charges, overhead, and general expenses equal to $200,000. If management proposes to increase present annual sales of $800,000 by 30 percent with a 20 percent increase in fixed charges, overhead, and general expenses, what annual sales amount is required to provide the same gross earnings as the present plant operation? What would be the net profit if the expanded plant were operated at full capacity with an income tax on gross earnings of 35 percent? What would be the net profit for the enlarged plant if total annual sales remained at $800,000? What would be the net profit for the enlarged plant if the total annual sales actually decreased to $700,000
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