The​ S&H Construction Company expects to have total sales next year totaling $15,200,000. In​ addition, the firm pays taxes at 35 percent and will owe $304,000 in interest expense. Based on last​ year's operations the​ firm's management predicts that its cost of goods sold will be 57 percent of sales and operating expenses will total 25 percent.

To calculate the expected net income for S&H Construction Company, we need to follow these steps:

1. **Sales**: The expected sales are $15,200,000.

2. **Cost of Goods Sold (COGS)**: The cost of goods sold is 57% of sales, so:
   \[
   \text{COGS} = 0.57 \times 15,200,000 = 8,664,000
   \]

3. **Operating Expenses**: The operating expenses are 25% of sales, so:
   \[
   \text{Operating Expenses} = 0.25 \times 15,200,000 = 3,800,000
   \]

4. **Earnings Before Interest and Taxes (EBIT)**: EBIT is calculated by subtracting the COGS and operating expenses from total sales:
   \[
   \text{EBIT} = 15,200,000 - 8,664,000 - 3,800,000 = 2,736,000
   \]

5. **Interest Expense**: The interest expense is given as $304,000. Subtracting this from EBIT:
   \[
   \text{Earnings Before Tax (EBT)} = 2,736,000 - 304,000 = 2,432,000
   \]

6. **Taxes**: The tax rate is 35%, so:
   \[
   \text{Taxes} = 0.35 \times 2,432,000 = 851,200
   \]

7. **Net Income**: Finally, subtract the taxes from the earnings before tax:
   \[
   \text{Net Income} = 2,432,000 - 851,200 = 1,580,800
   \]

### Conclusion:
The expected net income for S&H Construction Company is **$1,580,800**.

Would you like to explore more details, or do you have any questions?

Here are five related questions to expand the discussion:
1. What impact would a change in the tax rate have on net income?
2. How would increasing interest expenses affect net income?
3. What is the break-even point for sales given the current cost structure?
4. How could the company improve its net income by adjusting operating expenses?
5. What would the net income be if sales increased by 10% but costs remained proportional?

**Tip**: Monitoring the relationship between sales, costs, and taxes helps in strategic planning for maximizing profits.

The S&H Construction Company expects to have total sales next year totaling $15,200,000. In addition, the firm pays taxes at 35 percent and will owe $304,000 in interest expense. Based on last year's operations, the firm's management predicts that its cost of goods sold will be 57 percent of sales and operating expenses will total 25 percent.

Calculate the expected net income for S&H Construction with sales of $15.2 million, a cost of goods sold at 57%, operating expenses at 25%, interest expenses of $304,000, and a tax rate of 35%. Learn the step-by-step process for determining net income based on these key financial factors.

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