Gaming Solutions is a small company that assembles PCs to gamer customer specification. The company buys all of its component parts from Northern Oregon Computer Warehouse. In the past year, the company had the following before tax profit:
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The company, owned by Steven Rich, has seven full time employees. These employees are each paid a base salary of $38,000 per year. In addition, they receive a bonus equal to 30 percent of operating profits before bonuses. Owner draw is the amount Steven pays himself out of company profits.
The company is in the process of planning profit for the coming year. Northern OregonComputer Warehouse has agreed that their prices to Gaming Solutions will be reduced by 20 percent on all purchases over $1,000,000.
Required:
Estimate profit before taxes and owner draw for five levels of sales: $1,600,000; $1,700,000;
$1,800,000; $1,900,000; $2,000,000. (Round all calculations to the nearest dollar.)