Income Taxes and Cost-Volume-Profit Analysis

The target profit for a company required to pay income taxes should consider the effect of those taxes on their analysis. Step 1 requires the calculation of a new after-tax target amount. Step 2 converts the after-tax profit to a before-tax target amount. Finally, step 3 calculates the target profit in dollars or units for the desired profit calculated in step 2. Learn more about these 3 steps in Section 6.6.