Refer to the data in Brief Exercise 86. Assume a 40% tax rate, and assume that the

Question:

Refer to the data in Brief Exercise 8–6. Assume a 40% tax rate, and assume that the profits in the figures shown in parts (1) and (2) are after-tax amounts.

Required:

Redo Brief Exercise 8–6.

Brief Exercise 8–6

Lin Corporation has a single product, whose selling price is $180 and whose variable cost is $100 per unit. The company’s monthly fixed expenses are $60,000.

Required:

1. Using the equation method, compute the unit sales that are required to earn a target before-tax profit of $10,000.

2. Using the contribution margin approach, compute the dollar sales that are required to earn a target before-tax profit of $15,000.

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

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