Question

Elgin Battery Manufacturers had sales of $1,000,000 in 2015 and their cost of goods sold is $700,000. Selling and administrative expenses were $100,000. Depreciation expense was $80,000 and interest expense for the year was $10,000. The firm's tax rate is 30 percent. What is the dollar amount of taxes paid in 2015?

Answer 1

First, determine the profit for a certain year by subtracting the total cost from the total revenue.

Total revenue = $1,000,000

Total Cost = $700,000 + $100,000 + $80,000 + $10,000
Total cost = $890,000

The revenue is calculated below,

Revenue = $1,000,000 - $890,000
R = $110,000

The tax is calculated by multiplying the revenue by the percentage given.

Tax = ($110,000)(0.30)
Tax = $33,000

Answer: $33,000