Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

help please! Multiple Product Planning with Taxes In the year 2008, Wiggins Processing Company had the following contribution income statement: WIGGINS PROCESSING COMPANY Contribution Income

help please! image text in transcribed
image text in transcribed
image text in transcribed
Multiple Product Planning with Taxes In the year 2008, Wiggins Processing Company had the following contribution income statement: WIGGINS PROCESSING COMPANY Contribution Income Statement For the Year 2008 Sales Variable costs Cost of goods sold Selling and administrative Contribution margin Fixed Costs Factory overhead Selling and administrative Before-tax profit Income taxes (39%) After-tax profit $1,000,000 $440,000 200,000 (640,000) 360,000 190,000 80,000 (270,000) 90,000 (35,100) $54,900 HINT: Round the contribution margin ratio to two decimal places for your calculations below. (a) Determine the annual break-even point in sales dollars. (b) Determine the annual margin of safety in sales dollars. (c) What is the break-even point in sales dollars if management makes a decision that increases fixed costs by $36,000? (d) With the current cost structure, including fixed costs of $270,000, what dollar sales volume is required to provide an after-tax net income of $150,000? Do not round until your final answer. Round your answer to the nearest dollar. (e) Prepare an abbreviated contribution income statement to verify that the solution to part (d) will provide the desired after-tax income. Round your answers to the nearest dollar. Use rounded answers for subsequent calculations. Do not use negative signs with any of your answers. WIGGINS PROCESSING COMPANY Income Statement For the Year 2008 Sales Variable costs Contribution margin Fixed costs Net income before taxes Income taxes (39%) Net income after taxes

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

IRS Audit Protection And Survival Guide Bed And Breakfasts

Authors: Gerald F. Bernard, Daniel J. Baran

1st Edition

0471166340, 978-0471166344

More Books

Students also viewed these Accounting questions