The Pelican Corporation has a variable cost ratio of 60 percent of sales and total fixed costs
Question:
The Pelican Corporation has a variable cost ratio of 60 percent of sales and total fixed costs of \(\$ 1,000,000\) per year. The corporation expects the same variable cost ratio and fixed costs for the coming year.
{Required:}
(1) Calculate the breakeven point for the coming year.
(2) What income can be expected from a budgeted sales of \(\$ 2,800,000\) ?
(3) Calculate the level of sales required to produce an income of \(\$ 500,000\) after income taxes (assume a \(40 \%\) of income tax rate).
(4) If the current year's operating income was \(\$ 200,000\), calculate the necessary increase in sales revenue in the coming year for an operating income of \(\$ 300,000\).
Step by Step Answer:
Cost Accounting For Managerial Planning Decision Making And Control
ISBN: 9781516551705
6th Edition
Authors: Woody Liao, Andrew Schiff, Stacy Kline