Question 1133084
additional gross income is 120,000.
6% is not collectible = .06 * 120,000 = 7,200.
5% is additional expense required for collecting = .05 * 120,000 = 6,000.
80% involves production and selling costs = .8 * 120,000 = 96,000.


total expenses are 7,200 + 6,000 + 96,000 = 109,200.
net income is therefore 120,000 - 109,200 = 10,800.
tax on that is 30% = 3,240.
incremental income is therefore 10,800 - 3,240 = 7,560.


that's what i get if all the costs are based on percentages of the incremental sales.