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6 ently leased facilities for the manu- P6-10A. Break-Even and Net Income Planning Hank Company has recently tease Tacture of a new product. Based on
6 ently leased facilities for the manu- P6-10A. Break-Even and Net Income Planning Hank Company has recently tease Tacture of a new product. Based on studies made by its accounting personnel, the following data are available: Estimated annual sales: 20.000 units. Amount Unit Cost Estimated Costs $345,000 $17.25 Direct materials. .......... 328,000 16.40 Direct labor 196,000 9.80 Manufacturing overhead. ......... 124,000 6.20 Administrative expenses..... $993,000 $49.65 Selling expenses are expected to be 10% of sales, and the selling price is $71 per unit. Ignore income tax in this problem. Required a. Compute a break-even point in dollars and in units. Assume that manufacturing overhead and administrative expenses are fixed but that other costs are variable. (Round contribution margin ratio computation to three decimal places.) b. What would net income before income tax be if 30,000 units were sold? c. How many units must be sold to earn a net income before income tax of 10% of sales
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