jamie316
jamie316
09.09.2019 • 
Business

Mastertech is a new software company that develops and markets productivity software for municipal government applications. net sales are uniformly distributed between $600,000 and $1,200,000. cost of sales is normally distributed with a mean of $540,000 and a standard deviation of $20,000. selling expenses has a fixed component of that is uniformly distributed between $75,000 and $110,000. administrative expenses are normal with a mean of $50,000 and standard deviation of $3,500. variable expenses are estimated to be 7% of net sales and interest expenses are $10,000. the company is taxed at a 50% rate and the company is interested in a risk profile of net income. net income can be found using the following set of equations: gross profit = net sales – cost of sales net operating profit = gross profit – administrative expenses – selling expenses net income before taxes = net operating profit – interest expenses net income = net income before taxes – taxes which of the inputs is uncertain and what parameters are associated with those uncertain inputs?

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