Problem 19

Intro

Roaring Camp Inc. projects the following numbers for next year:

• Sales: $2,400,000
• Costs of goods sold: $1,200,000
• Depreciation: $400,000
• Interest expenses: $100,000
• Net income: $200,000

Part 1

Assume a constant fraction of sales for the cost of goods sold, constant depreciation and interest, and a constant tax rate. What level of sales will generate a net income of $400,000 next year?