Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Choose Exercise (1-5) I 1 I v Delmar has a product that sells for a price of $40. The variable cost per unit is $24
Choose Exercise (1-5) I 1 I v 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 0 CM/UNIT 0 FIXED COSTS |:| 0 STEP 1: 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? EBT = STEP 2: Compute Units Necessary to Earn the EBT Above: Units Required = |:| Units to Sell = (Fixed Cost + EBT)/CM Per Unit STEP 3: Prove your answer by creating a CVP Income Statement, using the Units Required figure from above. Sales Revenue Total Variable Costs Contribution Margin Fixed Costs Earnings Before Taxes Income Tax (20%) Earnings After Taxes 0000000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started