Wallis Company: Maximizing Profit through Efficiency

How can Wallis Company maximize its profit while operating in a foreign country with a 15 percent VAT?

What is the total VAT amount that Wallis Company owes for the circuit boards it produced?

Maximizing Profit Strategy:

Wallis Company can optimize its profit by focusing on efficiency in production processes to minimize costs and increase net profit margin.

VAT Calculation:

Wallis Company owes $1,104,000 in Value Added Tax (VAT) for the circuit boards it produced in the foreign country, assuming the VAT is calculated based on the selling price.

In order to maximize profit while operating in a foreign country with a 15 percent VAT, Wallis Company can implement strategies to enhance efficiency and reduce costs. By streamlining production processes, minimizing waste, and optimizing resource allocation, Wallis can lower the cost per unit and increase its net profit margin.

To calculate the VAT amount owed by Wallis Company for the circuit boards it produced, we need to consider the selling price per unit, the total number of units manufactured, and the VAT rate in the foreign country. The material cost per unit is $6.40, while labor and overhead added $1.28 to the cost per unit. The selling price per unit is $9.60.

The total selling price for the 8.2 million boards is $78,720,000. The VAT rate in the foreign country is 15 percent. By multiplying the taxable amount by the VAT rate, we get $11,808,000. Converting this amount to dollars, the VAT owed by Wallis Company is $118,080.

By understanding the VAT implications and focusing on operational efficiency, Wallis Company can continue to maximize its profit and thrive in a competitive market environment.