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Shelly's Boutiques and Crafts had revenue of $5,700,000 this year on sales of 575,000 units. Variable costs were 35% and fixed costs totaled $3,150,000. Although
Shelly's Boutiques and Crafts had revenue of $5,700,000 this year on sales of 575,000 units. Variable costs were 35% and fixed costs totaled $3,150,000. Although the first five years were relatively profitable, increases in competition have led to a negative trend in profitability that has led them to the point where they have to make some changes to stay afloat. The company is evaluating two options to stay afloat. b.) Assuming an income tax rate of 35%, what dollar value of sales is required to earn an after tax profit of $800,000. What before tax profit would be needed to earn an after tax profit of $800,000? What is the contribution margin ratio? What dollar amount of sales would be required to earn the after tax profit described above
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