In 2018, X Company's revenue was $198,000, its total variable costs were $122,760, and its fixed...

In 2018, X Company's revenue was $198,000, its total variable costs were $122,760, and its fixed costs were $92,400. In 2019, the relationship between revenue and variable costs will not change, but fixed costs will decrease by $14,784. Assuming a tax rate of 35%, what will revenue have to be in order for X Company to earn $41,600 after taxes in 2019?

Expert Solution

Statement of Contribution 2018
Revenue	1,98,000
Less :Variable Cost	1,22,760	(122760/198000*100= 62%)
Contribution	75,240	(75240/198000*100=38%)
Less:Fixed cost	-92,400
Profit	-17,160

Calculation of Revenue 2019
Calculation of Profit before tax 2019
Profit after tax	41,600
Add: Tax	22,400	(64000-41600)
Profit before tax (A)	64,000
(41600*100/65=64000)
Add: Fixed Cost (B)	77,616
(92400-14784)
Contribution (A+B)	1,41,616	(38% of Revenue)
Revenue	3,72,674
(141616*100/38%)

ekkarill92 answered 1 year ago

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