Panama Pet Supply is considering selling to a group of new customers and creating new annual
sales of $70,000. 5% will be uncollectible. The collection cost on these accounts is 3.5% of new
sales, the cost of producing and selling is 80% of sales and the firm is in the 31% tax bracket.
What is the profit on new sales?
Solution
Statement showing profitability on new saleSale70000Less: Cost of production56000Less:
Uncollectible3500Less: Collection cost2450Profit before tax8050Less: Tax2495.50Profit after
tax5554.50.
UGC NET Paper 1 Mathematical Reasoning & Aptitude.pdf
Panama Pet Supply is considering selling to a group of new customers.pdf
1. Panama Pet Supply is considering selling to a group of new customers and creating new annual
sales of $70,000. 5% will be uncollectible. The collection cost on these accounts is 3.5% of new
sales, the cost of producing and selling is 80% of sales and the firm is in the 31% tax bracket.
What is the profit on new sales?
Solution
Statement showing profitability on new saleSale70000Less: Cost of production56000Less:
Uncollectible3500Less: Collection cost2450Profit before tax8050Less: Tax2495.50Profit after
tax5554.50
