Good evening sir,a question is been giving me problem, pls how do I calculate: level of revenue needed to yield an after tax income equal to a given percentage on sales?
2..how to calculate percentage changein the profit if sales is increased by a given percentage....
Thanks in anticipation.
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Cost volume profit analysis
6y ago#11 Profit before tax = SPv - VCv - FC where SP - sales oprice per unit, VC = variable cost per unit and v = volume in units.
If the tax rate is t, then profit after tax is (1 - t)(SPv - VCv - FC)
If you require after tax profit to be p% of revenue, then:
p xSPv = (1 - t)(SPv - VCv - FC)
You would put in the figures you are given and solve for v. Hence the required revenue is SPv
2 Profit before tax = SPv - VCv - FC
Work out the starting profit, then increase the sales volume by whatever % you are given and work out the new profit. The % increase in the two profits is then easily worked out.
2
Thank u sir..really helpful
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