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Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm's contribution margin ratio is 30 percent, and its annual fixed
Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm's contribution margin ratio is 30 percent, and its annual fixed expenses are $220,000. The firm's income tax rate is 45 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 $128,000? 3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $128,000? 4. Suppose the firm's income tax rate changes to 35 percent. What will happen to the break-even level of consulting service revenue? Complete this question by entering your answers in the tabs below. Req 1 to 3 Reg 4 Calculate the firm's break-even volume of service revenue. How much before-tax income must the firm earn to make an after tax net income of $128,000? What level of revenue for consulting services must the firm generate to earn an after-tax net Income of $128,000? (Do not round Intermediate calculations. Round your final answers to the nearest dollar amount.) Break even volume Before tax income Service revenue Reg 4 > Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm's contribution- margin ratio is 30 percent, and its annual fixed expenses are $220,000. The firm's income tax rate is 45 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 $128,000? 3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $128,000? 4. Suppose the firm's income tax rate changes to 35 percent. What will happen to the break-even level of consulting service revenue? Complete this question by entering your answers in the tabs below. Reg 1 to 3 Reg 4 Suppose the firm's income tax rate changes to 35 percent. What will happen to the break-even level of consulting service revenue? The break-even level of consulting service revenue will not change The break-even level of consulting service revenue will increase The break-even level of consulting service revenue will decreaso.
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