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If Austria?s annual corporation tax was 22% on the first 200,000 of sales and 20% on sales exceeding 200,000, how much is their corporation tax bill for the year (assuming each unit is sold at 3.5)?
Step 1 – Calculate the total value of Austrian unit sales Total Austrian unit sales = 105,800
Total value of Austrian unit sales = 105,800 x 3.5 = 370,300
Step 2 - Calculate the corporation tax for the first
200,000 of Austrian unit sales 200,000 x 22% =44,000
Step 3 - Calculate the tax for sales exceeding 200,000
370,300 - 200,000 = 170,300
170,300 x 20% = 34,060
Step 4 – Calculate the total tax 44,000 + 34,060
Thus the correct answer is (E) 78,060
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