A firm has a contribution ratio of 45% and wants to earn an after tax profit of $72,000 and the firm operates in a 32% income tax rate bracket. It has fixed costs of $110,000 per annum, being the administration marketing and distribution expenses
Required:
i. Compute the sales volume that will earn the $63,000 after tax (5 marks)
ii. What sales volume would earn the desired profit but before tax (5 marks)
iii. On the basis of the above results, compile proforma income statement for (i) & (ii) above to verity your results (10 marks)

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