Question
CVP Analysis with Taxes (Single Product). Riviera Incorporated produces flat panel televisions. The company has annual fixed costs totaling $10,000,000 and variable costs of $600
CVP Analysis with Taxes (Single Product). Riviera Incorporated produces flat panel televisions. The company has annual fixed costs totaling $10,000,000 and variable costs of $600 per unit. Each unit of product is sold for $1,000. Riviera expects to sell 70,000 units this year (this is the same data as the previous problem). Assume a tax rate of 30 percent. Required: Round all calculations to the nearest dollar and nearest unit where appropriate. a. How many units must be sold to earn an annual profit of $2,000,000 after taxes? b. What amount of sales dollars is required to earn an annual profit of $500,000 after taxes? c. Refer to requirement a. What would happen to the number of units required to earn $2,000,000 in operating profit if the company were a non-profit organization that did not incur income taxes? Explain.
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