Question

Gilley Inc. sells a single product. Gilley's most recent income statement is given below: Sales (Sold...

Gilley Inc. sells a single product. Gilley's most recent income statement is given below:

Sales (Sold 4,000 units) $120,000

Variable costs: Variable manufacturing costs (48,000) Variable selling and general costs (20,000) Contribution margin 52,000 Fixed costs: Fixed manufacturing costs (30,000) Fixed selling and general costs (10,000) Operating income $12,000

How many units must be sold to achieve net income (after tax) of $15,000? Assume income tax rate of 40%. Compute the new "break-even point" in units if fixed manufacturing costs are increased by 10,000, and a target operating income is $18,000. (SHOW WORK)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer to Q1

Units to be sold for NEt income of $15,000 after tax, tax rate is 40% means before tax income should be $15,000/0.60 ; $25,000

Units sold = Fixed cost + Desired profit / CM per unit

= ($30,000+$10,000+$25,000)/$52,000/4000 ; 5,000 units

Answer to Q2

New Break Even point ; Fixed cost + Desired profit / CM per unit

; $30,000+10,000+10,000 / $13 ; 3846 Units

Will not ocnisdered the Target income as breakeven point assume there is no profit in business, so only fixed cost increase in above calculation is considered.

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
The income statement for Sapphire Manufacturing Company for 2018 is as follows: ​ Sales (20,000 units)...
The income statement for Sapphire Manufacturing Company for 2018 is as follows: ​ Sales (20,000 units) $150,000 Variable expenses 50,000 Contribution margin $100,000 Fixed expenses   30,000 Operating income $ 70,000 ​ If sales increase by 2,000 units, what will happen to profit? Select one: a. Profit will increase by $13,000. b. Profit will increase by $10,000. c. Profit will decrease by $15,000. d. Profit will decrease by $18,000.
Below is the variable costing income statement for South Bend Co.:          Sales, 6,000 units                    &nbsp
Below is the variable costing income statement for South Bend Co.:          Sales, 6,000 units                                                                    $210,000 Total variable costs:          Beg. inventory,           680 units             $13,600          Variable manufacturing cost of          goods manufactured,    ? units           + 132,000          Ending inventory,     1,280 units           - (25,600)          Variable manufacturing cost of goods $120,000          Variable selling & admin. exp.             + 24,900     ($144,900) Contribution margin                                                                $65,100 Total fixed costs:          Fixed factory overhead                ...
Spencer Company's most recent monthly contribution format income statement is given below:             Sales.................................. $60,000 Variable...
Spencer Company's most recent monthly contribution format income statement is given below:             Sales.................................. $60,000 Variable expenses............. 45,000 Contribution margin.......... 15,000 Fixed expenses.................. 18,000 Net operating loss.............. ($3,000)             The company sells its only product for $10 per unit. There were no beginning or ending inventories.                         Required:             What are total sales in dollars at the break-even point? What are total variable expenses at the break-even point? What is the company's contribution margin ratio? d.   If unit sales...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 75,000 Variable expenses 45,000 Contribution margin 30,000 Fixed expenses 22,800 Net operating income $ 7,200 9.What is the break-even point in dollar sales? 10. How many units must be sold to achieve a target profit of $18,000? 11. What is the margin of safety in dollars? What is the margin...
Adidas manufactures two products; the following contribution format income statement shows that product B is not...
Adidas manufactures two products; the following contribution format income statement shows that product B is not performing well: Details Total Product G Product B Sales 430,000 320,000 110,000 Variable expenses 300,000 210,000 90,000 Contribution margin 160,000 110,000 20,000 Fixed expenses: Rent 30,000 20,000 10,000 Depreciation 15,000 10,000 5,000 Maintenance 20,000 14,000 6,000 Supervisor salaries 48,000 28,000 20,000 manufacturing overhead 16,000 12,000 4,000 Net Income (loss) 1,000 26,000 (25,000) Additional Information: Rent is for one plant space where the two products...
Adidas manufactures two products; the following contribution format income statement shows that product B is not...
Adidas manufactures two products; the following contribution format income statement shows that product B is not performing well: Details Total Product G Product B Sales 430,000 320,000 110,000 Variable expenses 300,000 210,000 90,000 Contribution margin 160,000 110,000 20,000 Fixed expenses: Rent 30,000 20,000 10,000 Depreciation 15,000 10,000 5,000 Maintenance 20,000 14,000 6,000 Supervisor salaries 48,000 28,000 20,000 manufacturing overhead 16,000 12,000 4,000 Net Income (loss) 1,000 26,000 (25,000) Additional Information: Rent is for one plant space where the two products...
Answer the following question(s) using the information below. Burger Bob’s Boathouse sells only one product. 7,000...
Answer the following question(s) using the information below. Burger Bob’s Boathouse sells only one product. 7,000 units were sold In year resulting in $70,000 of sales revenue. Variable costs were $28,000 for the year, and fixed costs were $12,000. 4. Contribution margin per unit is a. $4.00 b. $4.29 c. $6.00 d. $10.00 e. $5.71 5. Break-even point in volume is a. 2,000 units. b. 3,000 units. c. 5,000 units. d. 7,000 units. e. 2,797 units. 6. The number of...
XYZ Inc. has provided to you an income statement using the contribution format. Sales (1,000 units)       ...
XYZ Inc. has provided to you an income statement using the contribution format. Sales (1,000 units)              $    400,000 Variable Expenses                     300,000 Contribution Margin               100,000 Fixed Expenses                          70,000 Net Operating Income        $         30,000 (The activity is within the relevant range). If advertising spending increases by $20,000, the variable cost per unit increases by $10, and unit sales increase by 50 units, the net operating income would be closest to: A.$4,500 B.$21,500 C.$9,450 D. $10,000 Flank Inc....
Total fixed cost = $66,000 Selling price per unit = $14 Variable costs per unit =...
Total fixed cost = $66,000 Selling price per unit = $14 Variable costs per unit = $6 Net target income (after tax) = $52,000 Tax rate = 35%. a)Calculate break even point in units b) calculate the sales revenue (in dollars) required to achieve the target income c) calculate the difference in operating income when one extra unit is sold d) if fixed cost increased by 20%, what is the new unit contribution margin required to maintain the same break-even...
Question 2 : Sharqiya Company estimates sales of 15,000 units for the upcoming period. At this...
Question 2 : Sharqiya Company estimates sales of 15,000 units for the upcoming period. At this sales volume its budgeted income is as follows:     Per Unit      Total Sales   $   60         $   900,000      Less variable costs:                        Manufacturing costs      30            450,000      Selling and administrative costs      10            150,000      Contribution margin   $   20         $   300,000      Less fixed costs:     ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT