Question
Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $92.00 per helmet, and fixed costs
Head-Gear Company produces helmets for bicycle racing. Currently, Head-Gear charges a price of $230 per helmet. Variable costs are $92.00 per helmet, and fixed costs are $1,158,000. The tax rate is 25 percent. Last year, 14,000 helmets were sold.
Required:
1. What is Head-Gear's net income for last year? $fill in the blank 1
2. What is Head-Gear's break-even revenue? In your computations, round the contribution margin ratio to two decimal places. $fill in the blank 2
3. Suppose Head-Gear wants to earn before-tax operating income of $829,200. How many units must be sold? Round to the nearest whole unit. fill in the blank 3 units
4. Suppose Head-Gear wants to earn after-tax net income of $590,850. How many units must be sold? In your computations, round dollar amounts to the nearest dollar. Round your final answer to the nearest whole unit. fill in the blank 4 units
5. Suppose the income tax rate rises to 35 percent. How many units must be sold for Head-Gear to earn after-tax income of $601,770? Round to the nearest whole unit. fill in the blank 5 units
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