(CMA) CVP analysis with income tax All-Day Candy Company is a wholesale distributor of candy. The company services grocery, convenience, and drug stores in a large metropolitan area. Small but steady growth in sales has been achieved by the All-Day Candy Company over the past few years while candy prices have been increasing. The company is formulating its plans for the coming fiscal year. Presented below are the data used to project the current year's after-tax net income of $110,400.

Expected annual sales volume (390,000 boxes) is $1,560,000. The tax rate is 40%.
Manufacturers of candy have announced that they will increase prices of their products an average of 15 percent in the coming year due to increases in raw material (sugar, cocoa, peanuts, etc.) and labor costs. All-Day Candy Company expects that all other costs will remain at the same rates or levels as the current year.

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Average selling price Average variable costs: Cost of candy Selling expenses Total... .... $4.00 per box $2.00 per box .40 per box $2.40 per box