A company has total fixed costs of $200,000. Its product sells for $25 per unit and variable costs amount to $15 per unit. The company wishes to earn an after-tax income of $35,000. Assume that the company has a 30% tax rate. a. How many units must be sold to achieve this after-tax income level? b. What level of pre-tax income must the firm earn to achieve the desired result described above?
A company has total fixed costs of $200,000. Its product sells for $25 per unit and variable costs amount to $15 per unit. The company wishes to earn an after-tax income of $35,000. Assume that the company has a 30% tax rate. a. How many units must be sold to achieve this after-tax income level? b. What level of pre-tax income must the firm earn to achieve the desired result described above?
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 13E
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A company has total fixed costs of $200,000. Its product sells for $25 per unit and variable costs amount to $15 per unit. The company wishes to earn an after-tax income of $35,000. Assume that the company has a 30% tax rate.
a. How many units must be sold to achieve this after-tax income level?
b. What level of pre-tax income must the firm earn to achieve the desired result described above?
Can you show your workings please
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