Question

Green Co. manufactures solar panels. In 2018 they are projecting that they will sell 3420 solar panels. They pay $800,000 to there employees. They will spend $900,000 on materials, $80,000 on utilities. They have bonds outstanding and they will pay $200,000 in interest on those bonds. Green Co will make a dividend distribution of $500,000 to its share holders. The IRS will allow a $100 tax credit for every solar panel that they sell, and they have $200,000 of allowable depreciation. All of their income comes from the sale of solar panels, and they will sell them at an average price of $1410. What is their projected income for 2018? $ _____

Answer 1

Average Price per Solar Panel = $ 1410 and Number of Panels Sold = 3420

Total Revenue = 3420 x 1410 = $ 4822200

LESS: Operating Costs = Employee Costs + Materials Cost + Utility Cost = 800000 + 900000 + 80000 = $ 1780000

Gross Profit = $ 3042200

LESS: Allowable Depreciation = $ 200000

Operating Profit = 2842200

LESS: Interest Expense = $ 200000

Profit Before Tax = 2642200

ADD: Tax Credit = 3420 x 100 = $ 342000

Profit After Tax = $ 2984200

LESS: Dividend Distributed = $ 500000

Retained Earnings = 2484200