CORRECT ANSWER B. TO EARN AN 8% AFTER-TAX RETURN ON THE $300,00...

207.

Correct answer b. To earn an 8% after-tax return on the $300,000 investment, Zipper

Company would require sales totaling $914,286 as shown below.

Contribution – Fixed costs

= 8% of investment ÷ (1 – tax rate)

.7A - $600,000

= (.08 x $300,000) ÷ ( 1 - .4)

.7A - $600,000

= $24,000 ÷ .6

.7A

= $600,000 + $40,000

A

= $914,286