CVP analysis with income tax Lucille Corporation sells a coffee maker for $40. The variable cost is $24 per unit and fixed cost is $32,000 per year. The company is subject to a 40 percent income tax rate. Management is evaluating operations and considers making the following changes:

1. Lease a new packaging machine for $4,000 per year, reducing variable cost by $1 per unit.

2. Increase selling price 10 percent to counteract an expected 25 percent increase in fixed cost.

3. Reduce fixed cost by 25 percent by moving to a lower rent location. This would have the effect of increasing variable costs by 10 percent.

4. Advertise in local media which would cost $5,000 per year. Lucille estimates that she will be able to maintain the same variable cost per unit but increase the price per unit by 25%.

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REQUIRED a. Calculate the current break-even point in units and dollars. b. Calculate the unit and dollar sales level that must be maintained to earn a return on sales of 9 percent after taxes. c. Calculate the expected after-tax profit with alternative 1 if sales are 3,200 units. d. Calculate the break-even point for alternative 2. e. Calculate the break-even point for alternative 3. f. Calculate the volume of sales needed to earn $15,000 after tax with alternative 3. g. Calculate the break-even point with alternative 4. h. Refer to alternative 4. If Lucille has an after tax profit target of $30,000, what sales volume in dollars does she need to achieve? Computer requirement Refer to the original data and assume that sales prices will be increased twenty percent because fixed costs are expected to increase by $10,000 per year and that variable costs will be reduced ten percent because some cost cutting measures will be implemented.