Question
Blanchard Company manufactures a single product that sells for $145 per unit and whose total variable costs are $87 per unit. The companys annual fixed
Blanchard Company manufactures a single product that sells for $145 per unit and whose total variable costs are $87 per unit. The companys annual fixed costs are $638,000. The sales manager predicts that annual sales of the companys product will soon reach 40,800 units and its price will increase to $208 per unit. According to the production manager, variable costs are expected to increase to $148 per unit, but fixed costs will remain at $638,000. The income tax rate is 35%. What amounts of pretax and after-tax income can the company expect to earn from these predicted changes? Prepare a forecasted contribution margin income statement.
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