2-41 Breakeven analysis and target profit, taxes Action Delivery delivers specialty medical sup- (LO2 plies to hospitals from its central warehouse. Maureen Fan, the owner and manager, charges customers a delivery fee of $2.80 per kilometer. The variable delivery costs reflect the cost of the drivers and the delivery vans. Maureen believes the total variable cost per kilometer is $2.10. The total fixed costs at Action Delivery amount to $280,000 per year. Required (a) What is the breakeven number of delivery kilometers per year? (b) How many kilometers of delivery service must be provided each year to earn a pretax in- come of $70,000? (c) Action Delivery faces a tax rate of 30%. How many kilometers of delivery service must be provided each year to earn an after-tax income of $29,400? (d) Maureen has the opportunity to contract out deliveries to an outside supplier who would charge Maureen a fixed fee of $180,000 per year plus $1.90 per kilometer. Under the con- tracting-out alternative, the existing level of fixed costs would drop to $200,000, making total fixed costs $380,000. At what annual number of delivery kilometers will Maureen be indifferent between continuing doing deliveries herself or contracting out the deliveries