b-t. 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 $1,450,600. The extra sales effort will also reduce cost of goods sold to 73 percent of sales. (There will be a larger markup in prices as a result of more aggressive selling.) Depreciation expense will remain at $10,000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to $16,800. 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.)

b-t. 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 $1,450,600. The extra sales effort will also reduce cost of goods sold to 73 percent of sales. (There will be a larger markup in prices as a result of more aggressive selling.) Depreciation expense will remain at $10,000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to $16,800. 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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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