Effect of taxes on break-even and target volume}

McDormand Products inc. desires an after-tax income of \(\$ 500,000\). It has fixed costs of \(\$ 2,500,000\), a unit sales price of \(\$ 300\), and unit variable costs of \(\$ 150\); it is in the \(40 \%\) tax bracket.

{Required:}

1. What amount of pre-tax income is needed to earn an after-tax income of \(\$ 500,000\) ?

2. What target volume sales revenue must be reached to earn the \(\$ 500,000\) after-tax income?

3. Assuming that this is a single-product firm, how many units must be sold to earn the after-tax income of \(\$ 500,000\) ?

4. What target volume sales revenue would have been needed to achieve the \(\$ 500,000\) of income had no income tax existed?