Continuing from the prior two problems, if Dexter pays 31% of pretax income (not sales) in taxes to various government authorities, please calculate Dexters after-tax net income.

Knowing what you now know about fixed and variable costs, assume that you read these two headlines:

Comcast (an internet supplier with high sunk costs and very low variable costs in its internet operations) expects to sign up 200,000 new internet subscribers this month for $50 per month or $600 per year for a total increase in sales of $120,000,000 per year.

Kroger (a large grocery store operation with high variable costs) expects its sales to increase $120,000,000 this year.

Assume that in both situations the increase is within the relevant range of operations and no additional capacity will need to be added. Which of these two companies will benefit the least financially from the increase in sales? Why?

New Madrid Chocolate Corporation manufactures bulk chocolate that it sells to Venus Candy Company. Currently, New Madrid packages and ships their bulk chocolate in 50-pound bars that are then shipped by truck to Venus. Venus then unpacks the bars, disposes of the packaging, melts the bars, and works the chocolate into smaller retail products. An astute and environmental conscientious employee observes that New Madrid could make the chocolate keep it hot or warm and ship it in heated train tanker cars to Venus rather than by truck as they do now. This would save cooling and reheating energy cost, packaging cost and time associated with these activities. Assume the following cost:

Existing cooling cost and time for New Madrid $12,000

Existing packaging cost for New Madrid $15,000

Existing annual transportation cost by truck $65,000 paid by New Madrid

New annual transportation cost by train $50,000 paid by New Madrid (if implemented)

Existing unpackaging and disposal cost of packaging for Venus $8,000

Existing reheating cost and time for Venus $33,000

How much will New Madrid gain if they approach Venus and Venus agrees to implement this activity-reducing plan?

How much will Venus benefit financially by implementing this plan?