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Jetson Co. sold 20,400 units of its only product and incurred a $53,368 loss (ignoring taxes) for the current year as shown here. During a
Jetson Co. sold 20,400 units of its only product and incurred a $53,368 loss (ignoring taxes) for the current year as shown here. During a planning session for year 2012s activities, the production manager notes that variable costs can be reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must increase its annual fixed costs by $154,000. The maximum output capacity of the company is 40,000 units per year. |
JETSON COMPANY Contribution Margin Income Statement For Year Ended December 31, 2011 | |||||
Sales | $ | 773,160 | |||
Variable costs | 618,528 | ||||
Contribution margin | 154,632 | ||||
Fixed costs | 208,000 | ||||
Net loss | $ | (53,368 | ) |
4. Compute the sales level required in both dollars and units to earn $156,000 of after-tax income in 2012 with the machine installed and no change in the unit sales price. Assume that the income tax rate is 35%. Round your intermediate calculations to 2 decimal places and final answers to the nearest whole number. Omit the "$" sign in your response.) Sales level required in dollars Sales level required in units units
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