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