Question

# Moving Forward Company, a producer of cardboard boxes, has the following information: Income tax rate 40...

Moving Forward Company, a producer of cardboard boxes, has the following information: Income tax rate 40 percent Selling price per unit \$2.75 DM per unit \$0.75 DL per unit \$0.25 Variable MOH per unit \$0.75 Total fixed costs \$37,500 (round units up to next whole number and dollars to nearest whole dollar (no decimal places0)

a)  Calculate break even in units (round units up to next whole number)

b) Calculate break even in dollars.

c) How many units must be sold to obtain a targeted before-tax income of \$6,000?

d)How many units must be sold to obtain a targeted after-tax income of \$6,000?

a.

Break even points in units = Fixed costs / Contribution margin per unit

Break even points in units = \$37,500 / \$1 (\$2.75-0.75-0.25-0.75) = 37,500 units

b.

Break even in dollars = 37,500 * \$2.75 = \$103,125

c.

Desired sales units = Fixed costs + Desired profit / Contribution margin per unit

Desired sales units = \$37,500 + 6,000 / \$1 = 43,500 units

d.

Desired sales units = Fixed costs + Desired profit / Contribution margin per unit

Desired sales units = \$37,500 + 10,000(\$6,000/60%) / \$1 = 47,500 units

#### Earn Coins

Coins can be redeemed for fabulous gifts.