Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable
Question:
Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $80.50 per helmet, and fixed costs are $1,255,800. The tax rate is 25 percent. Last year, 14,000 helmets were sold.
Required:
1. What is Head-Gear’s net income for last year?
2. What is Head-Gear’s break-even revenue? (Round to the nearest dollar.)
3. Suppose Head-Gear wants to earn before-tax operating income of $900,000. How many units must be sold? (Round to the nearest unit. )
4. Suppose Head-Gear wants to earn after-tax net income of $650,000. How many units must be sold? (Round to the nearest unit. )
5. Suppose the income tax rate rises to 35 percent. How many units must be sold for Head-Gear to earn after-tax income of $650,000? (Round to the nearest unit. )
LO1
Step by Step Answer:
Introduction To Cost Accounting
ISBN: 9780538749633
1st International Edition
Authors: Don R. Hansen, Maryanne Mowen, Liming Guan, Mowen/Hansen