Question

Part A. Pigwidgeon Company charges a selling price of $30 per unit for its single product,...

Part A.

Pigwidgeon Company charges a selling price of $30 per unit for its single product, incurs variable costs of $14 per unit, and total fixed costs of $280,000.

What unit sales volume is necessary to earn a net income before tax of $40,000?

Part B.

Pigwidgeon Company charges a selling price of $30 per unit for its single product, incurs variable costs of $14 per unit, and total fixed costs of $280,000.

What sales volume is necessary to earn a net income after tax of $42,000, assuming a tax rate of 25%?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Contribution margin=Sales-Variable cost

=(30-14)=$16 per unit

a.Target Contribution margin=Fixed cost+Target profits

=(280,000+40,000)=$320000

Hence units to be sold=Target Contribution margin/Contribution margin per unit

=320000/16

=20,000 units

b.Target before tax income=Net income after-tax/(1-tax rate)

=42000/(1-0.25)=$56000

Target Contribution margin=Fixed cost+Target profits before tax

=(280,000+56000)=$336000

Hence units to be sold=Target Contribution margin/Contribution margin per unit

=336000/16

=21000 units

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Loren Company's single product has a selling price of $15 per unit. Last year the company...
Loren Company's single product has a selling price of $15 per unit. Last year the company reported total variable expenses of $180,000, fixed expenses of $90,000, and a net operating income of $30,000. A study by the sales manager discloses that a 15% increase in the selling price would reduce unit sales by 10%. If her proposal is adopted, net operating income would: increase by $45,000 increase by $37,500 increase by $7,500 increase by $28,500
Brummel Corporation manufactures a single product. The selling price is $120 per unit, and variable costs...
Brummel Corporation manufactures a single product. The selling price is $120 per unit, and variable costs amount to $84 per unit. The fixed costs are $42,000 per month (round any units to the next highest full unit). Calculate: (show your calculations and round to 2 decimal places) What is the contribution margin per unit? What is the contribution margin ratio per unit? What is the monthly sales volume (in dollars) at the break-even point? How many units must be sold...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $110 per unit and whose total variable costs are $88 per unit. The company’s annual fixed costs are $308,000. (1) Prepare a contribution margin income statement for Blanchard Company at the break-even point. BLANCHARD COMPANY Contribution Margin Income Statement (at Break-Even) Amount Percentage of sales Sales Variable costs Contribution margin Fixed costs Net income Sales Variable costs Contribution margin Fixed costs Net income % Sales Variable costs Contribution margin Fixed costs...
Liliac Company sells a single product. The selling price of the product is $300 per unit....
Liliac Company sells a single product. The selling price of the product is $300 per unit. Variable cost is $180 per unit. Fixed cost is $360,000 per period. Currently, the company is selling 5,000 units of the product. Assume that the income tax rate is 20%. If the company wants to make a profit of $480,000 after tax, how many units of the products should be sold? A. 5,500 units B. 6,000 units C. 7,000 units D. 8,000 units
Blanchard Company manufactures a single product that sells for $160 per unit and whose total variable...
Blanchard Company manufactures a single product that sells for $160 per unit and whose total variable costs are $120 per unit. The company’s annual fixed costs are $629,000. The sales manager predicts that annual sales of the company’s product will soon reach 39,900 units and its price will increase to $199 per unit. According to the production manager, variable costs are expected to increase to $139 per unit, but fixed costs will remain at $629,000. The income tax rate is...
Rattle Company produces a single product. The product is sold for $12.00 per unit and has...
Rattle Company produces a single product. The product is sold for $12.00 per unit and has total variable costs of $4.00 per unit. Total fixed costs are $4,800,000 and the company faces a tax rate of 25%. What unit sales are required for Rattle Company to earn an after tax profit of $900,000? 500,000 600,000 750,000 925,000
Lucent Manufacturing Company makes a product that it sells for $67 per unit. The company incurs...
Lucent Manufacturing Company makes a product that it sells for $67 per unit. The company incurs variable manufacturing costs of $14 per unit. Variable selling expenses are $13 per unit, annual fixed manufacturing costs are $186,000, and fixed selling and administrative costs are $362,800 per year. Contribution margin ratio % Break-even point in dollars Break-even point in units LUCENT MANUFACTURING COMPANY Contribution Margin Income Statement Sales Variable costs Contribution margin Fixed costs Net income
Elhard Company produces a single product. The cost of producing and selling a single unit of...
Elhard Company produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 40,000 units per month is as follows: Direct materials...................................................... $18.00 Direct labor.......................................................... $6.80 Variable manufacturing overhead.......................... $2.40 Fixed manufacturing overhead............................. $11.60 Variable selling and administrative expense.......... $1.90 Fixed selling and administrative expense............. $5.10 The normal selling price of the product is $51.10 per unit. An order has been received from an overseas customer for 2,000...
If the selling price per unit of a product is P30, variable costs per unit are...
If the selling price per unit of a product is P30, variable costs per unit are P20, and total fixed costs are P10,000 and a company sells 5,000 units, operating income would be
Eley Corporation produces a single product. The cost of producing and selling a single unit of...
Eley Corporation produces a single product. The cost of producing and selling a single unit of this product at the company's normal activity level of 50,000 units per month is as follows:   Direct materials $47.60   Direct labor $9.10   Variable manufacturing overhead $2.10   Fixed manufacturing overhead $19.30   Variable selling & administrative expense $3.80   Fixed selling & administrative expense $18 The normal selling price of the product is $106.10 per unit. An order has been received from an overseas customer for 3,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT