Aqua Systems Engineering provides consulting services to city water authorities. A recent income stateand Taxes ment revealed

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Aqua Systems Engineering provides consulting services to city water authorities. A recent income stateand Taxes ment revealed variable costs of $740,000 on a sales level of $1,000,000. Annual fixed expenses are

(LO 3, 4) y $200,000, and the firm’s income tax rate is 35 percent. A bo Y ee ON 2 Required [2.8 S740 =O be 200002 ae,

a. Calculate the firm’s break-even volume of service revenue. Get wai u b he 3/

(Gocoeec s v¥$21$% LE

b. How much before-tax income must the firm earn to make an after-tax net income of $100,000?

if

c. What level of revenue must the firm generate to earn an after-tax net income of $100,000?

Qocorx +1S554 an : ;

SS SS 4

d. Suppose the firm’s income tax rate rises to 40 percent. What will happen to thé break-even level pf ae a ofl consulting revenue?

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Cost Management Strategies For Business Decisions

ISBN: 12

4th Edition

Authors: Ronald Hilton, Michael Maher, Frank Selto

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