Falcon Environmental Services, Inc. provides consulting services to power plants . The consulting firm's contribution-margin ratio is 15 percent, and its annual fixed expenses are $135,000. The firm's income-tax rate is 35 percent.

Required:

1.Calculate the firm's break-even volume of service revenue.

2.How much before-tax income must the firm earn to make an after-tax net income of$65,000?

3.What level of revenue for consulting services must the firm generate to earn an after-tax net income of $65,000?

4.Suppose the firm's income-tax rate rises to 45 percent. Explain what will happen to the break-even level of consulting service revenue.73.Shotz Corporation sells three products: J, K, and L. The following information was taken from a recent budget:

J K L

Unit sales 40,000 130,000 30,000

Selling price $60 $80 $75

Variable cost 40 65 50

4

Total fixed costs are anticipated to be $2,450,000.

Required:

A. Determine Shotz's sales mix.

B. Determine the weighted-average contribution margin.

C. Calculate the number of units of J, K, and L that must be sold to break even.

D. If Shotz desires to increase company profitability, should it attempt to increase or decrease the sales of product K relative to those of J and L? Briefly explain.