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Power Grid Engineering Associates, Inc., provides consulting services to commercial electric utilities. The consulting firm's contribution-margin ratio is 25 percent, and its annual fixed expenses
Power Grid Engineering Associates, Inc., provides consulting services to commercial electric utilities. The consulting firm's contribution-margin ratio is 25 percent, and its annual fixed expenses are $255,000. The firm's income-tax rate is 40 percent. Required: 1. Calculate the firm's break-even volume of service revenue. Break-even volume 2. How much before-tax income must the firm earn to make an after-tax net income of $142,000? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) Before tax income 3. What level of revenue for consulting services must the firm generate to eam an after-tax net income of $142,000? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.) Service revenue 4. Suppose the firm's income-tax rate declines to 30 percent. What will happen to the break-even level of consulting service revenue? O The break-even level of consulting service revenue will not change. O The break-even level of consulting service revenue will increase. O The break-even level of consulting service revenue will decrease
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