Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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 $240,000. 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 $136,000? 3. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $136,000? 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 Req 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 $136,000? What level of revenue for consulting services must the firm generate to earn an after-tax net income of $136,000? (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.) Break-even volume Before tax income Service revenue

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

More Books

Students also viewed these Accounting questions