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The Quinn Corporation shows the following income statement. The firm uses FIFO inventory accounting. QUINN CORPORATION Income Statement for 2 0 XX Sales $ 1
The Quinn Corporation shows the following income statement. The firm uses FIFO inventory accounting.
QUINN CORPORATION
Income Statement for XX
Sales $ units at $
Cost of goods sold units at $
Gross profit
Selling and administrative expense
Amortization
Operating profit
Taxes
Aftertax income $
a Assume that the same unit volume is maintained in XY but the sales price increases by percent. Because of FIFO inventory policy, old inventory will still be charged off at $ per unit. Also assume that selling and administrative expense will be percent of sales and amortization will be unchanged. The tax rate is percent. Compute aftertax income for XYDo not round the intermediate calculations. Round the final answer to nearest whole dollar.
Aftertax income $
b In part a by what percent did aftertax income increase as a result of a percent increase in the sales price? Round the aftertax income answer to nearest dollar. Round the final answer to decimal places.
Gain in aftertax income
c Now assume in XZ the volume remains constant at units, but that the sales price decreases by percent from its XY level. Also, because of FIFO inventory policy, cost of goods sold reflects the inflationary conditions of the prior year and is $ per unit. Further assume that selling and administrative expense will be percent of sales and amortization will be unchanged. The tax rate is percent. Compute aftertax income. Do not round intermediate calculations. Round final answer to nearest whole dollar.
Aftertax income $
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