Use the information for Austin Automotive in Exercise E9-16 and assume a tax rate for the company
Question:
Use the information for Austin Automotive in Exercise E9-16 and assume a tax rate for the company of 30 percent.
a. If Austin Automotive wants to earn an after-tax profit of \(\$ 135,800\), how many units must the company sell?
b. If Austin Automotive wants to earn an after-tax profit of \(\$ 7.20\) on each unit sold, how many units must the company sell?
Data From Exercise E9-16:-
Austin Automotive sells an auto accessory for \(\$ 180\) per unit. The company's variable cost per unit is \(\$ 30\) for direct material, \(\$ 25\) per unit for direct labor, and \(\$ 17\) per unit for overhead. Annual fixed production overhead is \(\$ 37,400\), and fixed selling and administrative overhead is \(\$ 25,240\).
a. What is the contribution margin per unit?
b. What is the contribution margin ratio?
c. What is the break-even point in units?
d. Using the contribution margin ratio, what is the break-even point in sales dollars?
e. If Austin Automotive wants to earn a pre-tax profit of \(\$ 51,840\), how many units must the company sell?
Step by Step Answer:
Cost Accounting Foundations And Evolutions
ISBN: 9781618533531
10th Edition
Authors: Amie Dragoo, Michael Kinney, Cecily Raiborn