Choose Exercise (1-5) 1 Delmar has a product that sells for a price of $40. The variable cost per unit is $24 and fixed costs are $145,000 for the year. Delmar's income tax rate is 20% How many units must Delmar sell in order to earn an after-tax income of $100,000? Start with the CVP info: PRICE 0 VC PER UNIT CM/UNIT FIXED COSTS Using the Earnings After Tax and the tax rate to calculate Earnings Before Tax. EBT EAT divided by (1-TaxRate) What is the Earnings Before Tax? STEP 1: EBT = Compute Units Necessary to Earn the EBT Above: Units to Sell (Fixed Cost + EBT)/CM STEP 2: Units Required Per Unit Prove your answer by creating a CVP Income Statement, using the Units Required figure from above. STEP 3: Sales Revenue 0 Total Variable Costs 0 Contribution Margin C Fixed Costs Earnings Before Taxes Income Tax (20 % ) Earnings After Taxes ALT-BE-TAX