Assume the firm hires Ms. Hood, an efficiency expert, as a consultant. She suggests that by increasing
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Question:
Assume the firm hires Ms. Hood, an efficiency expert, as a consultant. She suggests that by increasing selling and administrative expenses to 14 percent of sales, sales can be increased to $1,130,200. The extra sales effort will also reduce cost of goods sold to 73 percent of sales (There will be a larger mark-up in prices as a result of more aggressive selling). Amortization expense will remain at $13,000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to $18,800. The firm's tax rate will remain at 30 percent. Compute revised earnings after taxes based on Ms. Hood's suggestions for Carr Auto Wholesalers.
What will be the income statement?
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