The Carey Company sold 100,000 units of its product at ($ 20) per unit. Variable costs are
Question:
The Carey Company sold 100,000 units of its product at \(\$ 20\) per unit. Variable costs are \(\$ 14\) per unit (manufacturing costs of \(\$ 11\) and selling costs of \(\$ 3\) ). Fixed costs are incurred uniformly throughout the year and amount to \(\$ 792,000\) (manufacturing costs of \(\$ 500,000\) and selling costs of \(\$ 292,000)\). There are no beginning or ending inventories.
{Required:}
Determine the following:
(1) The breakeven point for this product.
(2) The number of units that must be sold to earn an income of \(\$ 60,000\) for the year (before income taxes).
(3) The number of units that must be sold to earn an after-tax income of \(\$ 90,000\), assuming a tax rate of 40 percent.
(4) The breakeven point for this product after a 10 percent increase in wages and salaries (assuming labor costs are 50 percent of variable costs and 20 percent of fixed costs).
Step by Step Answer:
Cost Accounting For Managerial Planning Decision Making And Control
ISBN: 9781516551705
6th Edition
Authors: Woody Liao, Andrew Schiff, Stacy Kline