Income statement: Changes in sales needed to achieve a forecasted net income.
Hermann Industries is forecasting the following income statement:
Operating costs excluding depreciation
and amortization 4,400,000
Depreciation and amortization 800,000
Taxes (40%) 880,000
Net income $1,320,000
The CEO would like to see higher sales and a forecasted net income of $2,500,000.
Assume that operating costs (excluding depreciation and amortization) are 55% of sales, and depreciation and amortization and interest expenses will increase by 10%. The tax rate, which is 40%, will remain the same. What level of sales would generate $2,500,000 in net income?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/accounting/income-statement-changes-in-sales-needed-to-achieve-a-forecasted-net-income-7eed