Problem 3-62 (Algo) Extensions of the CVP Analysis-Taxes (LO 3-4) Eagle Company makes the MusicFinder, a sophisticated satellite radio. Eagle has experienced a steady growth in sales for the past five years. However, Ms. Luray, Eagle's CEO, believes that to maintain the company's present growth will require an aggressive advertising campaign next year. To prepare for the campaign, the company's accountant, Mr. Bednarik, has prepared and presented to Ms. Luray the following data for the current year, year 1: Variable costs: Direct labor (per unit) Direct materials (per unit) Variable overhead (per unit) 94 40 11 Total variable costs (per unit) $ 145 Manufacturing Fixed costs (annual): Selling Administrative Total fixed costs (annual) Selling price (per unit) 387,000 299,000 786,000 $ 1,472,000 403 Expected sales revenues, year 1 (25,000 units) $ 10,075,000 Eagle has an income tax rate of 35 percent. Ms. Luray has set the sales target for year 2 at a level of $11,687,000 (or 29,000 radios).