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How do I find the revenue/unit for 20x2 and 20x3 P-31: Inflation and inventory accounting effect (LOS) The Canton Corporation shows the following income statement
How do I find the revenue/unit for 20x2 and 20x3
P-31: Inflation and inventory accounting effect (LOS) The Canton Corporation shows the following income statement (below). The firm uses Fifo nventory accounting. 2) Assume in 202 that the same 17,600 -unit volume is maintained, but that the sales price increases by 10 percent. Because of Fifo inventory policy, old inventory will still be charged off at $7 per unit. Also assume selling and administrative expense will be 5 percent of sales and tepreciation will be unchanged. The tax rate is 30 percent. Compute aftertax income for 202. ) In part a, by what percent did aftertax income increase as a result of a 10 percent increase in the sales price? Explain why this impact took place. Now assume that in 203 the volume remains constant at 17,600 units, but the sales price decreases by 15 percent from its year 20x2 level. Also, because of Fifo inventory policy, cost of goods sold reflects the inflationary conditions of the prior year and is $7.50 per unit. Further, assume selling and administrative expense will be 5 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute the aftertax Step by Step Solution
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