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?

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Cost Accounting Foundations And Evolutions

ISBN: 9781618533531

10th Edition

Authors: Amie Dragoo, Michael Kinney, Cecily Raiborn

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