Hydro Systems Engineering Associates, Inc. provides consulting services to city water authorities. The consulting firms contribution-margin ratio is 25 percent, and its annual fixed expenses are $255,000. The firms income-tax rate is 40 percent.

Required:

1. Calculate the firms break-even volume of service revenue.

2. How much before-tax income must the firm earn to make an after-tax net income of $142,000?

3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $142,000?

4. Suppose the firms income-tax rate changes to 30 percent. What will happen to the break-even level of consulting service revenue?