Olivian Company wants to earn $$540,000$ in net $($after$-$tax$)$ income next year. Its product is priced at $$350$ per unit. Product costs include:

Direct materials $$105\mathrm{.}00$

Direct labor $$77\mathrm{.}00$

Variable overhead $$17\mathrm{.}50$

Total fixed factory overhead $$450,000$

Variable selling expense is $$14$ per unit; fixed selling and administrative expense totals $$300,000.$ Olivian has a tax rate of $40$ percent.

Required:

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$1.$ Calculate the before$-$tax profit needed to achieve an after$-$tax target of $$540,000.$

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$90,000$

$2.$ Calculate the number of units that will yield operating income calculated in Requirement $1$ above. If required, round your answer to the nearest whole unit.

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units

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$3.$ Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement $2.$ Do NOT round interim calculations and, if required, round your answer to the nearest dollar.

Olivian Company

Income Statement

For the Coming Year

Total

Sales

$Sales

Total variable expense

Total variable expense

Total contribution margin

$Total contribution margin

Total fixed expense

Total fixed expense

Income taxes

$Income taxes

Less: Income taxes

Less: Income taxes

$$-$ Select $-$

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$4.$ What if Olivian had a $35$ percent tax rate? Would the units sold to reach a $$540,000$ target net income be higher or lower than the units calculated in Requirement $2?$

Higher

Calculate the number of units needed at the new tax rate. In your calculations, round before$-$tax income to the nearest dollar. Round your answer to the nearest whole unit.

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units