Answer the following questions using the information below:
Assume the following cost information for Fernandez Company:

-If the tax rate is t, it is possible to calculate planned operating income by:
A)dividing net income by t
B)dividing net income by 1- t
C)multiplying net income by t
D)multiplying net income by 1- t

Question

Answer the following questions using the information below:
Assume the following cost information for Fernandez Company:
 
-If the tax rate is t, it is possible to calculate planned operating income by:
A)dividing net income by t 
B)dividing net income by 1- t 
C)multiplying net income by t 
D)multiplying net income by 1- t

Quizplus · Accepted Answer

The planned operating income can be calculated by subtracting the total costs from the total revenue. The total revenue can be calculated by dividing the net income by (1- t) because the net income is after-tax income, which is equal to revenue minus total costs. Therefore, by dividing net income by (1-t), we can get the total revenue, and by subtracting the total costs from it, we can get the planned operating income.

Answer the Following Questions Using the Information Below