# CVP analysis, income taxes. Westover Motors is a small car dealership. On average, it sells a car for \$32,000, which it purchases from the manufacturer for \$28,000. Each month, Westover Motors pays \$53,700 in rent and utilities and \$69,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a commission of \$400 for each car they sell. Westover Motors also spends \$10,500 each month for local advertisements. Its tax rate is 40%.Required:How many cars must Westover Motors sell each month to break even?Westover Motors has a target monthly net income of \$69,120. What is its target monthly operating income? How many cars must be sold each month to reach the target monthly net income of \$69,120?

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CVP analysis, income taxes. Westover Motors is a small car dealership. On average, it sells a car for \$32,000, which it purchases from the manufacturer for \$28,000. Each month, Westover Motors pays \$53,700 in rent and utilities and \$69,000 for salespeople’s salaries. In addition to their salaries, salespeople are paid a commission of \$400 for each car they sell. Westover Motors also spends \$10,500 each month for local advertisements. Its tax rate is 40%.

Required:

1. How many cars must Westover Motors sell each month to break even?
2. Westover Motors has a target monthly net income of \$69,120. What is its target monthly operating income? How many cars must be sold each month to reach the target monthly net income of \$69,120?
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Step 1

1.

Calculation of break-even point:

Resulting number...

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