Question
USE THE FOLLOWING FOR QUESTIONS 7--10: ABC COMPANY Units sold 20,000 Selling price $30 per unit Variable costs $22 per unit Total fixed costs $140,000
USE THE FOLLOWING FOR QUESTIONS 7--10:
ABC COMPANY
Units sold 20,000
Selling price $30 per unit
Variable costs $22 per unit
Total fixed costs $140,000
Tax rate 40%
7. For ABC COMPANY, how many units have to be sold in order to earn an aftertax net income of $18,000?
a. 21,750
b. 21,000
c. 21,250
d. 21,500
8. For ABC COMPANY, using one of the short-cut tricks that you learned, assuming the sales decrease by 25%, what would be the decrease in net income?
| a. | $50,000 |
| b. | $60,000 |
| c. | $40,000 |
| d. | $80,000
|
9. For ABC COMPANY, using the other short-cut trick that you learned, assuming sales price decreased by 25%, what would be the decrease in net income?
| a. | $120,000 |
| b. | $140,000 |
| c. | $160,000 |
d. $150,000
10. Suppose ABC COMPANY makes the following changes in its cost structure: variable costs increase by $3/unit and fixed costs decrease 30%. What will be the effect on the breakeven point in units? HINT: Using the original data, first calculate the old breakeven point.
A. Increase by 2,100 units
B Increase by 2,000 units
C. Increase by 2,200 units
D. Increase by 2,300 units
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Frank Woods Business Accounting Volume 1
Authors: Frank Wood, Alan Sangster
10th Edition
9780273681496
