Question

What percentage of each dollar of sales affected net income given Sales of $120,000; Cost of Goods Sold of $70,000; Operating Expenses of $10,000; Interest Expense of $5,000; Income Tax Expense of $5,000; and Net Income of $30,000

Answer 1

Using the formula (Net Income / Sales) × 100, we find that 25% of each dollar of sales affected the net income, meaning $0.25 of each dollar contributed to the net income.

Step-by-step explanation:

To calculate the percentage of each dollar of sales that affected net income, we need to find the ratio of the net income to the total sales and then convert it to a percentage. Given the sales of $120,000 and a net income of $30,000, the calculation would be as follows:

Net Income Percentage = (Net Income / Sales) × 100

Net Income Percentage = ($30,000 / $120,000) × 100

Net Income Percentage = 0.25 × 100

Net Income Percentage = 25%

This means that for every dollar of sales, $0.25 contributed to the net income, or in other words, 25% of each dollar of sales affected the net income.

Answer 2

Answer: 25%

Step-by-step explanation: