1. ABC Company is planning for 2021 financial performance. 2020 total sales were $6,000,000. Monthly fixed...

1. ABC Company is planning for 2021 financial performance. 2020 total sales were $6,000,000. Monthly fixed costs for the firm for 2020 averaged $260,000 and are expected to increase by 8% for 2021. The variable cost ratio for 2020 averaged 40% and is expected to increase to 42% for 2021. The firm's average tax rate for 2020 was 30% and is expected to remain the same for 2021. The firm incurs no interest expense.

Required: (show your work below and write your final answer for each question on the line provided)

1. Calculate annual breakeven sales (revenue) for 2020 and 2021

2. Calculate the actual net operating income (NOI) and the after tax income for 2020 and 2021 assuming there is no change in sales for 2021.

3. It is management's goal to have operations produce a NOI / Sales ratio of 12% for 2021. Given the data above what level of 2021 sales are needed to reach the 12% NOI / Sales ratio?

Expert Solution

ekkarill92 answered 1 year ago

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