Suppose the company hires Ms. Carr, an efficiency expert, as a consultant. She suggests that by increasing

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Question:

Suppose the company 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 $1,530,800. The extra sales effort will also reduce the cost of goods sold to 72 percent of sales. (There will be a larger increase in prices as a result of a more aggressive sale.) Depreciation expense will remain at $14,000. However, more cars will need to be in inventory to satisfy customers, and interest expense will rise to $17,000. The business tax rate will remain at 30 percent.

Calculate the revised after-tax profit based on Mrs. Carr's suggestions for Lemon Auto Wholesalers.
(Answer in the income statement form)