A company produces and sells several products for gross sales $($income$)$ of $2\mathrm{.}25$ million dollars $($for FY$2023).$ Returns and allowances are $4$ percent of gross sales, reducing the income for net sales.

Marketing, management, and general expenses $($MM&G$)$ are figured to be $18\%$ of the net sales. Cost of goods sold is the sum of labor $(14\%$ of gross sales$),$ materials $(23\%$ of gross sales$),$ and overhead. Overhead is figured to be variable overhead $(28\%$ of the combined cost of labor and materials$)$ plus fixed overhead $($$$80,000).$

Gross profit is the difference between net sales and cost of goods sold. To figure the profit before tax, MM&G expenses need to be subtracted from the gross profit. Finally, there are the $27\%$ Federal taxes and $8\%$ state taxes that need to be considered, but these are only assessed if there is indeed a profit; if the profit before tax is zero or below $($a loss from operations$),$ the tax is zero $($Hint: you will need to use the IF function here$).$ If included, then Net Income is equal to profit before tax $$ federal and sales tax.

$1.$ Assume that the Federal tax rate is $40\%$ and gross sales total $$3,000,000,$ what would the change be in net income?

$2.$ As in question $1,$ assume that the Federal tax rate is $40\%$; but this time, assume that gross sales are only $$2,500,000.$ What will be the change in net income?

$3.$ What will the change in net income be for a scheme estimated to reduce returns and allowances to $3\%$ of gross sales but would likely increase the MMandG fraction to $19\%?$

$4.$ What would be the change in net income if fixed overhead is doubled?

$5.$ If State taxes are reduced by half, what would be the after tax profit?

$6.$ What would the net income $($or loss$)$ be if sales dropped to $$500,000,$ and Fixed Overhead increased to $$100,000?$

$7.$ Assume that the Return Fraction increases to $7\%.$ What would be the Profit After Tax?

$8.$ New, more efficient equipment can be purchased that would lower the variable overhead cost fraction to $25\%$ but would raise the fixed overhead to $$150,000.$ What would be the net income if the equipment were purchased?

$9.$ What would be the change in net income if gross sales were $$300,000?$

Goal$-$Seeking Questions:

$1.$ What amount would gross sales have to be in order for the company to show a net income of zero $($the break$-$even sales point$)?$

$2.$ What gross sales are needed to generate an after tax profit of $$1,000,000?$

$3.$ What would the change in gross sales be if the company had a net income loss of $$10,000?$