Costing Paper Quest 7(b) Wrong

So what's the net cash inflow finally..40000 - 7500 - 12000 right ? coming out to be 20500 per year right ?

no its 20875 cash inflow after tax n saving of 12000 after tax, so it comes at 32875

no wait..the incremental revenues are 40000..and the incremental costs are 7500, and the loss due to commission is 12000 so that gets subtracted ...it comes out to be 20500

and it's earning 12000 ...before..when it outsources the work..when it acquires the machine..there's a loss of 12000 since it won't be earning that..so 12000 will get subtracted..not added..

And you can't assume a tax rate, because it says 'net of taxes', which implies that tax has been adjusted from everything and what is left are the real cash flows which need to be calculated

no tax rate is to be assumed

yes totally agrree...no tax rate to b assumed...

yes no tax rate assumed

 nice

due to shortage of time i have prepred income statement of two companies in following format-----

 particulars         company a            company b

sales                      -                                    -

- v/c                             -                               -

contribution                 -                              -

and so on                 is this is right or i have to make income statement of both the companies individually 

please tell me how much was weightage of or in new course costing paper??????????

 As there in question .... there r two possibilities.....

first .....to earn commission.... & second... Purchase of the m/c

so we had to compare these.. possibilities....

No tax percentage will be assumed...