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Hello sir ,pls how do I calculate level of revenue needed to yield an after tax income equal to 20%of sales :
If SP IN UNIT IS #3000
VC IS 1800
FC IS 280420
TAX 35%
THANKS IN anticipationWhy are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers and explanations.
The best way is to use a bit of simple algebra.
The after tax contribution is (3,000 – 1,800) x 65% = 780 per unit.
The after tax fixed costs are 380,420 x 65% = 247,273If they sell X units, then the profit will be 780X – 247,273.
They want the profit to be 20% of revenue which is 20% x 3,000 x X = 600X
Therefore,
780X – 247,273 = 600XIf you solve this for X then you know how many units they need to sell. Multiply that by 3,000 and you have the required revenue.
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