Lemon Auto Wholesalers had sales of $920,000 last year, and cost of goods sold represented 75 percent of sales. Selling and administrative expenses were 13 percent of sales. Depreciation expense was $17,000 and interest expense for the year was $11,000. The firm's tax rate is 30 percent. a. Compute earnings after taxes. $ 920,000 $ 920,000 Lemon Auto Wholesalers Income Statement Sales Cost of goods sold Gross profit Selling and administrative expense Depreciation expense Operating profit interest expense Earnings before taxes $ 920,000 $ 920,000 Taxes Earnings after taxes $ 920,000 b-1. Assume the firm hires Ms. Carr, an efficiency expert, as a consultant. She suggests that by increasing selling and administrative expenses to 15 percent of sales, sales can be increased to $970,600. The extra sales effort will also reduce cost of goods sold to 71 percent of sales. (There will be a larger markup in prices as a result of more aggressive selling.) Depreciation expense will remain at $17.000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to W. SUM LICHT THIS IS. CUIT, I CILICII y capci, usu Con TSUILUIL. One suyyesu wylicumy suyunu USULLIVE expenses to 15 percent of sales, sales can be increased to $970,600. The extra sales effort will also reduce cost of goods sold to 71 percent of sales. (There will be a larger markup in prices as a result of more aggressive selling.) Depreciation expense will remain at $17,000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to $18,500. The firm's tax rate will remain at 30 percent. Compute revised earnings after taxes based on Ms. Carr's suggestions for Lemon Auto Wholesalers. (Round taxes and earnings after taxes to 1 decimal place.) Lemon Auto Wholesalers Income Statement $ 0 $ 0 $ 0 $ 0.0 b-2. Will her ideas increase or decrease profitability? O Increase profitability O Decrease profitability