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Carr Auto Wholesalers had sales of $1,400,000 in 20XX, and cost of goods sold represented 77 percent of sales. Selling and administrative expenses were 13 percent of sales. Amortization expense was $10,000 and interest expense for the year was $9,000. The firm's tax rate is 30 percent. a. Compute earnings after taxes using percentage-of-sales method. (Input all answers as positive values. Round your intermediate calculations to the nearest whole dollars.) b-1. Assume the firm hires Ms. Hood, an efficiency expert, as a consultant. She suggests that by increasing selling and administrative expenses to 15 percent of sales, sales can be increased to $1,450,600. The extra sales effort will also reduce cost of goods sold to 73 percent of sales (There will be a larger mark-up in prices as a result of more aggressive selling). Amortization expense will remain at $10,000. However, more automobiles will have to be carried in inventory to satisfy customers, and interest expense will go up to $16,800. The firm's tax rate will remain at 30 percent. Compute revised earnings after taxes based on Ms. Hood's suggestions for Carr Auto Wholesalers. (Input all answers as positive values. Round your intermediate calculations to the nearest whole dollars.) b-2. Will her ideas increase or decrease profitability? Increase profitability Decrease profitability

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