Question
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
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.
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