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Legacy Company is considering the production and sale of a new product with the following sales and cost data: unit sales price $18; unit variable costs $8.10; and total fixed costs of $8,250. Legacy is subject to a 25% tax rate. Determine the dollar sales needed to generate an after-tax income of $33,000.
Incremental Net Income
Net income resulting from a particular action or decision, calculated as the difference in total net income if the action is taken versus if it is not.
Tax Rate
The percentage at which an individual or corporation is taxed by the government on income or profits.
After-Tax Discount Rate
The discount rate used in capital budgeting that accounts for the effects of income tax.
Capital Budgeting
The process of evaluating and selecting long-term investments that are in line with the goal of a firm's shareholders' wealth maximization.
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