Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cost-Volume Profit Analysis Hailstorm Company sells a single product for $28 per unit. Variable costs are $22 per unit and fixed costs are $60,000 at

Cost-Volume Profit Analysis Hailstorm Company sells a single product for $28 per unit. Variable
costs are $22 per unit and fixed costs are $60,000 at an operating level of 7,000 to 15,000 units.
a. What is Hailstorm Company's break-even point in units?
b. How many units must be sold to earn $12,000 before income tax?
c. How many units must be sold to earn $14,500 after income tax, assuming a 35% tax rate?
a. Break-even point (units)
Total Per Unit
Revenue
Variable Cost
Contribution Margin
Fixed Costs
Operating Income * At break-even point, operating income is equal to $0. This would
Break-even point (units) units
b. Target units given a target pre-tax income
Total fixed costs
Desired income before tax
Contribution margin per unit
Target units units
c. Target units given an after-tax target income
Total fixed costs
Target after-tax income
Tax rate
Target pre-tax income
Contribution margin per unit
Target units units * units should be rounded up to the next whole unit

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Diversity In Library Collections

Authors: Rosalind Washington, Sarah Voels

1st Edition

1440878749, 978-1440878749

More Books

Students also viewed these Accounting questions

Question

Explain the importance of Human Resource Management

Answered: 1 week ago

Question

Discuss the scope of Human Resource Management

Answered: 1 week ago

Question

Discuss the different types of leadership

Answered: 1 week ago

Question

Write a note on Organisation manuals

Answered: 1 week ago