Company-Wide Cost-Volume-Profit Analysis All of our discussion of cost-volume-profit analysis so far has focused on individual revenue segments-a product line, a marketing proposal, or a division. Cost-volumeprofit analysis can also be applied to the company as a whole, to gain insight into the risks and opportunities arising from possible volume fluctuations. For this type of analysis, volume almost always must be measured by revenue dollars, and income is likely to be measured on an after-tax basis. Make the highly simplified assumption that all income is subject to tax at a uniform 40 percent rate, and that losses result in tax refunds at the same rate because the company is permitted to offset those losses against income on which it has paid taxes in previous years. Challenge. When all of Van Horn's divisions and administrative offices are combinedthat is, not just the mower division but the company as a whole variable costs average 65 percent of revenues and estimated fixed costs total $2.5 million. The pretax contribution margin is 35 percent of total revenue (100 percent less 65 percent). At a 40 percent tax rate, the company's net income can be estimated from the following formula: Van Horn isn't in business to break even (R= $7,142,857) . Its target is to earn an after-tax rate of return of 10 percent on its assets. Suppose it has assets totaling $10 million. Its income objective won't be met unless it earns net income of at least 10 percent of $10 million, or $1 million. We can introduce this income target into the cost-volume-profit analysis. What is the minimum requirement of $1 million (or 10%) after tax nature for Van Horns mgmt, a kind of fixed cost or a kind of variable cost? Can we find the volume at which Van Horn's operations will just meet its income target by solving the same equation as before? . Y/N What is the new R or Break-even then? $