Olivian Company wants to earn $420,000 in net (after-tax) income next year. Its product ispriced at $275 per unit. Product costs include: Direct materials $90Direct labor $65Variable overhead $16Total fixed factory overhead $440,000 Variable selling expense is $14 per unit; fixed selling and administrative expense totals $290,000.Olivian has a tax rate of 40 percent.Required:1. Calculate the before-tax profit needed to achieve an after-tax target of $420,000.2. Calculate the number of units that will yield operating income calculated in Requirement 1above. (Round to the nearest unit.)
Olivian Company wants to earn $420,000 in net (after-tax) income next year. Its product is
priced at $275 per unit. Product costs include:
Direct materials $90
Direct labor $65
Variable overhead $16
Total fixed factory overhead $440,000
Variable selling expense is $14 per unit; fixed selling and administrative expense totals $290,000.
Olivian has a tax rate of 40 percent.
Required:
1. Calculate the before-tax profit needed to achieve an after-tax target of $420,000.
2. Calculate the number of units that will yield operating income calculated in Requirement 1
above. (Round to the nearest unit.)
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