Q2- Riyadh Electricity Company manufactures chandeliers . Following is information for next years operations, based on an estimated volume of 20,000 units: 4 marks

Expected revenues $1,000,000

Unit costs:

Direct materials $ 6.25

Direct labor 15.75

Variable overhead 5.50

Fixed manufacturing overhead 2.50

Total $30.00

Other fixed costs:

Administration, marketing, etc. $225,000

Income tax rate 30%

a. What is the breakeven point for next year?

b. What is next years projected after-tax income?

c. Suppose the managers set a target after-tax income of $100,000. Estimate the number of units that must be sold.